Insurance Law – May 4
§ 1. — Provisions common to property insurance and liability insurance
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- Hypothecary Creditors Caisse Populaire des Deux Rives v Soci
- Issue
- Determining if the hypothecary clause is a separate contract (two-step process) A) Is there a contract (CCLC 984) Yes
- Is it an insurance contract Yes: (CCLC 2468)
- An intentional fault by the hypothecary debtor is an uncertain event in so far as the insurance contract between hypothecary creditor and the insurer is concerned. It is therefore an insurable risk.
| § 1. — Provisions common to property insurance and liability insurance
I. — Principle of indemnity 2463. In damage insurance, the insurer is obliged to indemnify for the injury suffered at the time of the loss, but only up to the amount of the coverage. 1991, c. 64, a. 2463; I.N. 2014-05-01. 2464. The insurer is bound to indemnify for injury resulting from superior force or the fault of the insured, unless an exclusion is expressly and restrictively stipulated in the policy. However, the insurer is never bound to indemnify for injury resulting from the insured's intentional fault. Where there is more than one insured, the obligation of coverage remains with respect to those insured who have not committed an intentional fault. Where the insurer covers injury caused by a person for whose acts the insured is liable, the obligation of coverage subsists regardless of the nature or gravity of the fault committed by that person. 1991, c. 64, a. 2464; I.N. 2014-05-01. 2465. The insurer is not bound to indemnify for injury resulting from natural loss, diminution or losses sustained by the property arising from an inherent defect in it or its nature. 1991, c. 64, a. 2465; I.N. 2014-05-01. II. — Material change in risk 2466. The insured is bound to promptly notify the insurer of any change that increases the risks stipulated in the policy and that result from events within his control if they are such as to materially influence an insurer in setting the rate of the premium, appraising the risk or deciding to continue to insure it. If the insured fails to discharge his obligation, the provisions of article 2411 apply, adapted as required. 1991, c. 64, a. 2466; I.N. 2014-05-01. 2467. On being notified of any material change in the risk, the insurer may cancel the contract or propose, in writing, a new rate of premium, in which case the insured is bound to accept and to pay the premium at the new rate within 30 days of the proposal, otherwise the policy ceases to be in force. However, if the insurer continues to accept the premiums or pays an indemnity after a loss, he is deemed to have acquiesced in the change notified to him. 1991, c. 64, a. 2467; I.N. 2014-05-01. 2468. The lack of occupation of a residence does not constitute a change which increases the risk if it does not last more than 30 consecutive days or the insurance covers a second residence designated as such. Nor does the admission of tradesmen into the residence to do maintenance or repair work for a period of not more than 30 days constitute a change which increases the risk. 1991, c. 64, a. 2468; I.N. 2014-05-01. III. — Payment of the premium 2469. The insurer is entitled to the premium only from the time the risk begins, and only for its duration if the risk disappears completely as a result of an event that is not covered by the insurance. The insurer may bring an action for payment of the premium or deduct it from the indemnity payable. 1991, c. 64, a. 2469. IV. — Notice of loss and payment of indemnity 2470. The insured shall notify the insurer of any loss which may give rise to an indemnity, as soon as he becomes aware of it. Any interested person may give such notice. An insurer who has not been so notified, and thereby suffers injury, may set up against the insured any clause of the policy providing for forfeiture of the right to indemnity in such a case. 1991, c. 64, a. 2470; I.N. 2014-05-01. 2471. At the request of the insurer, the insured shall inform the insurer as soon as possible of all the circumstances surrounding the loss, including its probable cause, the nature and extent of the damage, the location of the insured property, the rights of third persons, and any concurrent insurance; he shall also provide the insurer with vouchers and attest under oath to the truth of the information. Where, for a serious reason, the insured is unable to fulfil that obligation, he is entitled to a reasonable time in which to do so. If the insured fails to fulfil his obligation, any interested person may do so on his behalf. 1991, c. 64, a. 2471; I.N. 2014-05-01. 2472. Any deceitful representation entails the loss of the right of the person making it to any indemnity for the risk to which the representation relates. However, if the occurrence of the risk insured against has entailed the loss of both movable and immovable property or of both property for occupational use and personal property, forfeiture is incurred only with respect to the class of property to which the representation relates. 1991, c. 64, a. 2472; I.N. 2014-05-01. 2473. The insurer is bound to pay the indemnity within 60 days after receiving the notice of loss or, if the insurer requested them, the relevant information and vouchers. 1991, c. 64, a. 2473; I.N. 2014-05-01. 2474. The insurer is subrogated to the rights of the insured against the person responsible for the loss, up to the amount of indemnity paid. The insurer may be fully or partly released from his obligation towards the insured where, owing to any act of the insured, he cannot be so subrogated. The insurer may never be subrogated against persons who are members of the household of the insured. 1991, c. 64, a. 2474; I.N. 2014-05-01. V. — Assignment 2475. A contract of insurance may be assigned only with the consent of the insurer and in favour of a person who has an insurable interest in the insured property. 1991, c. 64, a. 2475. 2476. Upon the death or bankruptcy of the insured or the assignment of his interest in the insurance to a co-insured, the insurance continues in favour of the heir, trustee in bankruptcy or remaining insured, subject to his performing the obligations to which the insured was bound. 1991, c. 64, a. 2476; I.N. 2014-05-01. VI. — Cancellation of the contract 2477. The insurer may cancel the contract on prior notice which shall be sent to every insured named in the policy. The cancellation takes place 15 days after notice is received by the insured at his last known address. A contract of insurance may also be cancelled on mere notice in writing given to the insurer by each of the insured named in the policy. The cancellation takes place upon receipt of the notice. The insured named in the policy may, however, give one or more of their number the mandate of receiving or sending the notice of cancellation. 1991, c. 64, a. 2477. 2478. Where the right to the indemnity has been hypothecated and notice to that effect has been given to the insurer, the contract may not be cancelled or amended to the detriment of the hypothecary creditor unless the insurer has given him prior notice of at least 15 days. 1991, c. 64, a. 2478; I.N. 2014-05-01. 2479. Where the insurance is cancelled, the insurer is entitled to only the earned portion of the premium, computed day by day if the contract is cancelled by the insurer, or at the short-term rate if it is cancelled by the insured; the insurer is bound to refund any overpayment of premium. 1991, c. 64, a. 2479; I.N. 2014-05-01. 2479.1. If the insured has assigned or hypothecated his right to a premium overpayment refund to or in favour of the person who paid the premium and the insurer has received notice of the assignment or hypothec, the insurer is bound to make the overpayment refund to the assignee or to the holder of the hypothec. The assignment or hypothec may not be set up against third persons until the insurer receives notice of the assignment or hypothec. If two or more assignments or hypothecs are made or granted on the same right to a premium overpayment refund, priority is determined according to when the insurer received notice. 2008, c. 20, s. 131. § 2. — Property insurance I. — Content of the policy 2480. In addition to the particulars prescribed for insurance policies generally, an indication shall be made in a property insurance policy of any exclusion of coverage not resulting from the ordinary meaning of the words or any limitation of coverage applying to specified objects or classes of objects, specifying the conditions on which the contract may be cancelled by the insured, as well as those on which the insurance may be reinstated or continued after a loss. 1991, c. 64, a. 2480. II. — Insurable interest 2481. A person has an insurable interest in property where the loss or deterioration of the property may cause him direct and immediate injury. It is necessary that the insurable interest exist at the time of the loss but not necessary that the same interest have existed throughout the duration of the contract. 1991, c. 64, a. 2481; I.N. 2014-05-01. 2482. Future property and incorporeal property may be the subject of a contract of insurance. 1991, c. 64, a. 2482. 2483. Property insurance may be contracted on behalf of whomever it may concern. The clause is valid as insurance for the benefit of the policyholder or as a stipulation for another in favour of the beneficiary of the clause, whether known or potential. The policyholder alone is liable for payment of the premium to the insurer; any exception that the insurer may set up against him may also be set up against the beneficiary of the contract, whoever he may be. 1991, c. 64, a. 2483; I.N. 2014-05-01. 2484. The insurance of property in which the insured has no insurable interest is null. 1991, c. 64, a. 2484; I.N. 2014-05-01. III. — Extent of coverage 2485. In fire insurance, the insurer is bound to indemnify for damage which is an immediate consequence of fire or combustion, whatever the cause, including damage to the property during removal or that caused by the means employed to extinguish the fire, subject to the exceptions specified in the policy. The insurer also covers the disappearance of insured things that occurs during the fire, unless he proves that the disappearance is due to theft which is not covered. The insurer is not bound to indemnify for damage caused solely by excessive heat from a heating apparatus or by any process involving the application of heat where there is no fire or commencement of fire but, even where there is no fire, the insurer is bound to indemnify for damage caused by lightning or the explosion of fuel. 1991, c. 64, a. 2485; I.N. 2014-05-01. 2486. An insurer who insures property against fire does not cover damage due to fires or explosions caused by foreign or civil war, riot or civil disturbance, nuclear explosion, volcanic eruption, earthquake or other cataclysm. 1991, c. 64, a. 2486; I.N. 2014-05-01. 2487. The insurer is bound to indemnify for damage to the insured property caused by measures taken to save or protect it. 1991, c. 64, a. 2487; I.N. 2014-05-01. 2488. Insurance of things generally described as being in a certain place covers all things of the same kind which are in that place at the time of the loss. 1991, c. 64, a. 2488. 2489. The insurance of a furnished residence and that of movable property in general covers every class of movable property except what is expressly excluded or what is insured for only a limited amount. 1991, c. 64, a. 2489. IV. — Amount of coverage 2490. The value of the insured property is determined in the ordinary manner unless a special valuation formula is contained in the policy. 1991, c. 64, a. 2490. 2491. In unvalued policies, the amount of the coverage does not make proof of the value of the insured property. In valued policies, the agreed value makes complete proof, between the insurer and the insured, of the value of the insured property. 1991, c. 64, a. 2491; I.N. 2014-05-01. 2492. A contract made without fraud for an amount greater than the value of the insured property is valid up to that value; the insurer has no right to charge any premium for the excess but premiums paid or due remain earned by him. 1991, c. 64, a. 2492; I.N. 2014-05-01. 2493. The insurer may not refuse to cover a risk for the sole reason that the amount of the coverage is less than the value of the insured property. In such a case, he is released by paying the amount of the coverage in the event of total loss or a proportional indemnity in the event of partial loss. 1991, c. 64, a. 2493; I.N. 2014-05-01. V. — Losses, and payment of indemnity 2494. Subject to the rights of preferred and hypothecary creditors, the insurer may reserve the right to repair, rebuild or replace the insured property. He is then entitled to salvage and may take over the property. 1991, c. 64, a. 2494. 2495. The insured may not abandon the damaged property if there is no agreement to that effect. The insured shall facilitate the salvage and inspection of the insured property by the insurer. He shall, in particular, permit the insurer and his representatives to visit the premises and examine the insured property. 1991, c. 64, a. 2495. 2496. Any person who, without fraud, is insured by several insurers, under several policies, for the same interest and against the same risk, so that the total amount of indemnity that would result from the separate performance of such policies would exceed the loss incurred, may be indemnified by the insurer or insurers of his choice, each being liable only for the amount he has contracted for. No clause suspending all or part of the performance of the contract by reason of plurality of insurance may be set up against the insured. Unless otherwise agreed, the indemnity is apportioned among the insurers in proportion to the share of each in the total coverage, except with respect to specific insurance, which constitutes primary insurance. Hypothecary Creditors
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