Progressive Homes Ltd v Lombard General Insurance [2010] SCC
Facts
- BC Housing hired Progressive (P) to build several housing complexes that were built badly, P secured five successive commercial general liability insurance policies with L
- These policies were in place from the time of construction until the time actions against P were brought, and they were “occurrence policies” which insured P against damage caused by “occurrences” or “accidents”
- L initially defended P, then withdrew
Issues
- Whether L owed a duty to defend claims against P
Rules
- The duty to defend arises where there is the mere possibility that a claim falls within the insurance policy
- Where language of insurance policy is ambiguous, courts rely on general rules of contract construction
Interpretation should be consistent with reasonable expectation of parties, as long as interpretation is supported by text of policy
Avoid interpretation giving rise to unrealistic result or not in contemplation of parties
Similar insurance policies should be construed consistently
- If above rules of construction fail to resolve ambiguity, courts will construe the policy contra proferentem,against the insurer
- KC Pacific (A) owned a hotel that was damaged by fire, A made claim under insurance policy
- Guardian (R) argued that claim not brought within applicable limitation period
- R found applicable limitation period is one year from date of loss under statutory condition 14 of Part 5, Fire Insurance Part whereas A argued that policy fell under general provisions of Part 2 where limitation is one year from filing proof of loss
Issues
- Whether A’s multi-peril insurance policy falls within Part 5, fire insurance section, of the Insurance Act or Part 2, the general part
Rules
- Comprehensive insurance policies are governed by Part 2 of the Act
Analysis
- Insurance classification system in Act adopted at time when multi-peril insurance didn’t exist, discrepancy between reality and legislation
Question of classification should be resolved by legislators, not courts
By exclusion, the policy at hand doesn’t fit into any specific categories within s.119 of the Act, so it is governed by Part 2
Conclusion
- Appeal allowed, A’s claim was brought within applicable limitation period and could proceed to trial
Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co [1993] SCC
Facts
- Reid contracted to provide engineering services for sewage collection system in Manitoba, covered under a claims based policy from 1971-1981
- The town had recurring problems with the system, a claim for indemnity against Erie was settled in early 1981
- Five days after the policy expired, and Reid notified Erie of further damages
Issues
- Whether successive claims for damages arising out of the same negligent act constitute separate claims
- If the successive claim was separate, was the second claim made during the policy period
Rules
- “Claims made” and “occurrence” are not legal labels which dictate a certain legal result once a policy is characterized as one or another
The issue is always what the wording of a particular policy dictates
The principle that coverage provisions should be construed broadly and exclusion clauses narrowly
Where the policy is ambiguous, giving effect to the reasonable expectations of parties
- A “claim” is made where there must be some form of communication of a demand for compensation or other form of reparation by a third party upon the insured, or at least communication by the third party to the insured of a clear intention to hold the insured responsible for the damages in question
A claim is not the same as 1) mere requests for info, 2) filing a lawsuit without serving it on insured, and 3) expressions of dissatisfaction that clearly aren’t meant to convey a demand for compensation for damages
- It is open on the authorities to find that a claim has been made in the absence of a formal demand, unless the policy expressly stipulates
Where the reasonable insured in all the circumstances would conclude that a third party was making a claim against him/her in the sense that if satisfactory payment or other form of reparation were not made the third party would sue, then it may be said that a claim is made, though a formal statement of liability/demand hasn’t been tendered
Analysis
- Policy at issue contained both claims made and occurrence attributes, could be regarded as a hybrid policy
- Court then turned to defined “claim”
There were ambiguities in contract
Insured’s reasonable expectation, at minimum, was that the insurance plan would provide coverage for legitimate claims on an ongoing basis
To hold that damages claimed after expiry of the policy weren’t part of the claim would endorse a situation where an insured would in some circumstances, find it impossible to obtain indemnity for a loss
Therefore, the second set of damages discovered in 1981 formed part of the original claim made during the policy period
- Given that Erie didn’t require formal written demand for coverage to be triggered, it had to accept that facts and circumstances may establish a demand/assertion of liability sufficient to constitute a claim
A claim was made not through an express demand by the town, but impliedly
Reid knew of its own negligence, and knew that the town was considering further damages, thus the insured knew beyond a mere inquiry or mere suspicion that the third party might make a demand against him at some point in the future – this constitutes a claim that has been made
Conclusion
- The second claim was made within the policy period and therefore covered
