Nov 21, 2019

Insurers Take Note! Court Extends Insured's Two-Year Limitation Period

Statt v SGI Canada Insurance Services Ltd, 2019 ABQB 828 (CanLII)

The insured submitted a fire damage claim on November 14, 2014.

The insurer approved the claim and began repairs. Various disagreements arose between the parties shortly thereafter, prompting the insurer to stop repairs.

More than three years later the insured brought an originating application to recover the cost of outstanding repairs, among other things.

The insurer argued the originating application was filed out of time.

The insured argued the two-year limitation period should be extended pursuant to section 5.3(7) of the Fair Practices Regulation, AR 128/2001, because the insurer did not notify them of the limitation period as required by section 5.3.

The question was whether a letter the insurer’s independent adjuster sent the insured the day they submitted the claim satisfied section 5.3. The letter stated:

In accordance with the Alberta Insurance Act, we are enclosing a blank Proof of Loss form for your record, and must advise you of the two year limitation date applicable to your claim.

The application judge decided the letter did not satisfy section 5.3 because it was not given after a triggering event set out in section 5.3(2) and it did not tell the insured what they needed to do, when they needed to do it by, and pursuant to which legislation.

As such, he extended the limitation period to the day after the originating application was filed pursuant to section 5.3(7) and awarded the insured more than $170,000 in damages.

The take-away

(1) Insurers must notify insureds of the two-year limitation period applicable to their claim in accordance with section 5.3 of the Regulation.

Such notice must be given after one of the triggering events set out in section 5.3(2) and state what must be done, when it must be done by, and pursuant to which legislation (i.e. section 526, section 558, section 593, section 677, or section 708 of the Insurance Act, RSA 2000, c I-3).

(2) If an insurer fails to notify an insured of the two-year limitation period applicable to their claim in accordance with section 5.3 of the Regulation, the insured will likely be able to pursue the claim after the two-year limitation period has expired.

One to watch

This is the first time the Court has specified what must be included in the notice mandated by section 5.3 or applied section 5.3(7) since either section came into force.

Watch for my post on the outcome of the insurer’s appeal.