Property & Casualty Insurance

Property & Casualty Insurance

• 
  There are very few property only insurance policies
  
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  Virtually all homeowners and tenants property insurance policies will have liability coverage
  
  • 
    Thus, property and casualty
    

1. 
   Utmost good faith
   
2. 
   Fortuity
   
3. 
   Indemnity
   
4. 
   Compensation
   

1. 
   True intent is gleaned from the entire contract
   
2. 
   The reasonable expectations of the parties
   
3. 
   The application of the plain meaning
   
4. 
   Coverage is construed broadly. Exclusions narrowly
   
5. 
   Ambiguities are construed against the insurer
   

1. 
   The insured is your best friend. Always treat him as such (i.e. concept of utmost good faith)
   
2. 
   If you have to struggle to deny coverage, you probably should not
   
3. 
   Insurers, generally speaking, are in the business of providing coverage, not denying claims
   
4. 
   The duty of good faith does not cease with the commencement of action, but continues throughout. Insurance litigation is distinct (this isn’t universally accepted)
   
5. 
   Question authority. Simply because a judge says something does not make it so
   

• 
  See declaration page in synopsis
  
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  All risk policy or multi-peril policy?
  
• 
  All risk policies are subject to exclusions: better described as multi-peril policies
  
  • 
    Some are named peril policies which specify which perils are covered
    
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  NB. In this policy, the insurer is selling its own policies with its own in house agents. Agents of the insurer. The knowledge of the agent will be imputed to the insurer
  

• 
  Will specify who is insurer, agent, insured
  
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  Loss must occur within the policy period
  
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  Loss must occur at insured location
  
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  Type of policy
  
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  What is the occupancy?
  
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  Is there a mortgage clause?
  
  • 
    A special position. Not prejudiced by misrepresentation, acts or omissions of insured
    
• 
  Property: amount
  
  • 
    There is importance of insuring to value, since gaps in coverage are bad
    
• 
  Personal liability: limits, $2 mill standard
  
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  Optional coverage
  
  • 
    Why? Enhanced coverage endorsements result from competition
    

• 
  Are there additional named insureds? In the same position as the primary insured?
  
• 
  Are there “additional insureds”? There may be vicarious liability only
  

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  Insured perils
  
  • 
    “You are insured against all risk of direct physical loss or damages, subject to the exclusions and conditions in this policy”
    
  • 
    What does contract mean by ‘direct loss or damage’?
    
    • 
      The concept of the proximate, dominant or effective cause
      

• 
  E.g. policies typically exclude vandalism or malicious acts while the property is vacant even if permission for vacancy granted
  
  • 
    D torches the house, P needs fire coverage
    
  • 
    Vandalism may deliberately set fire, insurer will counter that policy is malicious
    

• 
  Wordings on the covered property
  
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  The dwelling building
  
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  Detached structures
  
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  Personal property
  
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  Basis of claim settlement
  
  • 
    Inflation protection
    
  • 
    Replacement cost or actual value, can take cash if building is damaged
    
• 
  Property not covered
  
• 
  Perils not covered
  
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  Specific limits of insurance
  
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  Extensions
  
• 
  Definitions: the devil in the details
  
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  Insurance under more than one policy
  
• 
  Subrogation: a further lecture
  

• 
  W.r.t. personal liability, coverage for claims for compensatory damages for bodily injury or property damage caused by an occurrence during the policy period: subject to exclusions
  
  • 
    E.g. criminal or intentional acts
    

• 
  In commercial policies, more than homeowner’s policies, there may be a co-insurance clause
  
• 
  A clause in a policy providing that, should the limit on coverage be below a specified percentage of the value of the insured property, the insurer is only liable for a proportion of the loss even in cases of partial damage: Brown, pg 132
  
• 
  Most insurers demand that brokers insure to full value, most insured’s want full coverage
  
  • 
    No gaps
    

• 
  A standard exclusion
  
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  Loss or damage caused by an intentional or criminal act of an insured: a spouse, a child, a member of the household
  
• 
  This could lead to great loss: Scott v Wawanesa (1989) 1 SCR 1445
  
  • 
    15 year old son deliberately burned down family home. Parents could not get coverage under homeowner’s policy since son was included as a named insured in the policy
    
  • 
    Broad coverage granted, but detrimental in these types of cases
    

• 
  The new Act re-enacts those provisions previously enacted in June 2011, allowing for recovery by innocent persons up to their proportionate share in the property where the insured property has been damaged by the intentional or criminal act of an insured
  

• 
  Prior to this case, there was limitation date of 1 year from date of loss in fire policy, limitation date was 1 year from filing period for other policies
  
  • 
    SCC held that fire policies hadn’t existed for years so this couldn’t shoehorn court into determining that the shorter limitation applied, therefore the longer limitation period applied
    
  • 
    Dominant policy in current world was the all-risk policy, therefore this is the one that took precedence
    

• 
  Generally, limitation period is 2 years from when insured knew that the loss or damage occurred
  

• 
  Under the present provisions of the Insurance Act, the Court only had jurisdiction to grant relief from forfeiture in limited circumstances where there had been imperfect compliance with a statutory condition
  
• 
  Under the new General Insurance Provisions, s. 24 of the Law and Equity Act will be applicable which gives broad jurisdiction to relieve against all penalties and forfeitures
  
  • 
    24  The court may relieve against all penalties and forfeitures, and in granting the relief may impose any terms as to costs, expenses, damages, compensations and all other matters that the court thinks fit.
    

• 
  Historically, the courts had not applied the Law and Equity Act to insurance contracts
  
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  While the inclusion of s. 24 of the Law and Equity Act may enhance consumer protection, it may lead to considerable difficulties with respect to a clear understanding of the rights and obligations of the parties to the insurance contract
  
  • 
    How will court interpret what is “unfair” or “unjust”?
    

• 
  The General Insurance Provisions also incorporate what was s. 129 from the Fire Part which provides the court with authority to provide relief with respect to unjust conditions or exclusions.
  
  • 
    In Marche v. Halifax Insurance Co., 2005 SCC 6, held that this provision provided the courts with discretion to provide relief from conditions, statutory or otherwise, which are unjust or unreasonable in their application or in terms of their consequences. Notwithstanding Marche, there had been considerable debate as to whether this provision historically applied to multi-peril policies
    
    • 
      For Harmon, this didn’t promote certainty
      
  • 
    Under the new Act, this debate comes to an end.
    
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  As with the inclusion of s. 24 of the Law and Equity Act providing broad jurisdiction to grant relief against forfeiture, there is little or no guidance on how the courts will apply these provisions to insurance contracts in the future
  
  • 
    There is a considerable risk that these provisions may well lead to increasing litigation in the future
    

• 
  Pursuant to s. 28.4 of the Act, an insurer cannot exclude coverage for fire or explosion unless those exclusions are allowed by the Regulations
  
  • 
    The regulations permit exclusions for criminal acts or omission, riot, civil commotion, war, invasion, hostilities, and so forth
    
  • 
    They do not permit exclusions for fire arising from earthquake. Further, the Regulations do not permit an exclusion for fire, unless set out above, when the property is vacant for a period not longer than 30 days.