VI. selected issues in interpreting insurance policies 4

VI. SELECTED ISSUES IN INTERPRETING INSURANCE POLICIES 4

Policy Interpretation 4

Corbould v. BCAA Insurance Corp (BCSC 2010) 5

Brissette Estate v. Wesbury Life Insurance (SCC) 5

Loss Caused by Accident 5

Co-operators Life Insurance Co. v. Gibbens (SCC 2009) 6

Progressive Homes Ltd. v. Lombard General Insurance Co (SCC 2010) 7

Nelson v. Industrial-Alliance Pacific Life Insurance (ABQB 2010) 7

Loss Caused by Intentional/Criminal Acts 8

Eichmanis v. Wawanesa Mutual Insurance 9

Erik Knutsen: “Why insurers should rethink criminal conduct exclusion” 10

Automobile Insurance: Who is Covered? 10

Wawanesa Mutual Insurance Co v. SC Construction (ONSC 2012) 10

Automobile Insurance: Loss Arising from the “Use or Operation” of a Motor Vehicle 11

Amos v. ICBC (SCC 1995) 11

Citadel General Assurance Co. v. Vytlingham (SCC 2007) 12

Lumbermens Mutual Casualty Co v. Herbison (SCC 2007) 13

Russo et al. v. John Doe (ONCA 2009) 13

Martin v. Freeze Night Club (ONCA 2013) 14

V-Twin Motorcycle School Ltd. v. ICBC (BCSC 2010) 14

Whipple v. Economic Mutual Insurance Co (2010) 15

VII. PUBLIC POLICY RESTRICTIONS 15

The following do not prejudice the right of a person entitled under subsection (2) to have the insurance money applied toward the person's judgment or settlement, and are not available to the insurer as a defence to an action under subsection (3): 16

(c) contravention of the Criminal Code or of a law or statute of any province, state or country by the owner, lessee or driver of the vehicle specified in the owner's certificate or policy. 16

Criminal Acts 16

Oldfield v. Transamerica and Goulet v. Transamerica (SCC 2002) 17

Life Insurance Proceeds and Suicide 17

Husak v. Imperial Life Assurance (Sask. CA 1969) 18

Burdens and Standards of Proof 18

VIII. CLAIMS PROCESS 18

Introduction 18

Obligations of an Insured Making a Claim 18

Marcoux v. Halifax Fire Insurance Co 19

Swan Hills v. Royal General Insurance (ABCA 1977) 23

Excusing Insured’s Breach of Contract 23

Without limiting section 24 of the Law and Equity Act, if 24

(a) there has been 24

(b) there has been a termination of the policy by a notice that was not received by the insured because of the insured's absence from the address to which the notice was addressed, 24

and the court considers it inequitable that the insurance should be forfeited or avoided on that ground or terminated, the court, on terms it considers just, may 24

(c) relieve against the forfeiture or avoidance, or 24

(d) if the application for relief is made within 90 days of the date of the mailing of the notice of termination, relieve against the termination. 24

Note that this section is applicable to accident and sickness insurance (s. 93) 24

Law & Equity Act s. 24- general power to grant relief against forfeiture 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 24

Jackson v. Canadian Northern Shield 26

Waiver under the common law: 27

Applies to alleviate an insured from its strict contractual obligations where there is, on the part of the insurer, “something said or done whereby the performance or observance of the condition or warranty need not be carried out, made nor proved” 27

Amounts to a purposeful decision, on the part of the insurer, not to hold the insured to a particular contractual obligation- it is an intentional alteration of a contract term which can occur before or after the contract term is breached 27

Saskatchewan River Bungalows v. Maritime Life Assurance Co (SCC 1994) 27

Maracle v. Travellers Indemnity Co 28

McConnell v. Aviva Insurance Co 28

(1) The obligation of an insured to comply with a requirement under a contract is excused to the extent that 30

(a) the insurer has given notice in writing that the insured's compliance with the requirement is excused in whole or in part, subject to the terms specified in the notice, if any, or 30

(b) the insurer's conduct reasonably causes the insured to believe that the insured's compliance with the requirement is excused in whole or in part, and the insured acts on that belief to the insured's detriment. 30

(2) Neither the insurer nor the insured is deemed to have waived any term or condition of a contract by reason only of 30

(a) the insurer's or insured's participation in a dispute resolution process under section 12, 30

(b) the delivery and completion of a proof of loss, or 30

(c) the investigation or adjustment of any claim under the contract. 30

Note that this provision is applicable to general insurance, life insurance (s. 38) and accident & sickness insurance (s. 93) 30

Waiver requirements: 30

(1) insurer knowingly abandons rights 30

(2) unequivocally and consciously communicates to insured; written notice excusing insured’s compliance 30

(3) unfair for insurer to retract promise of abandonment 30

insurer entitled to retract waiver without notice, but notice required after reliance 30

note that statutory modifications require that the waiver is stated in writing and signed by a person authorized for the purpose of the insurer 30

Paul v. Cumis Life 31

Insurer’s Obligation to Respond to Claims in Good Faith 31

Whiten v. Pilot Insurance Co (SCC 2002) 32

Fidler v. Sunlife (SCC 2006) 32

ICBC v. Hosseini (BCCA 2006) 32

Insurer’s Duty to Defend under Liability Insurance Policy 33

Great West Steel Industries v. Simcoe & Erie (ONCA 1980) 34

Nichols v. American Home Assurance Co (SCC 1990) 34

Lloyd’s of London v. Scalera (SCC 2000) 34

Monenco Ltd. v. Commonwealth Insurance Co. (SCC 2001) 35

Summary of the Nichols/Scalera/Monenco Trilogy 36

Sommerfield v. Lombard Insurance Group (SCC 2005) 37

Hanis v. Teevan (ONCA 2008) 38

Broadhurst & Ball v. American Home Assurance Co (ONCA 1990) 38

Economical Mutual Insurance Co v. ICBC (ABQB 1986) 39

Duty to Settle Within Policy Limits 39

X. OVERLAPPING POLICIES AND OTHER CONSEQUENCES OF INDEMNITY 40

Doctrine of Contribution 40

Determining Insurer’s Liability under Overlapping Policies 42

Family Insurance v. Lombard Canada Ltd (SCC 2002) 43

Commercial Union Assurance v. Hayden (QB 1977) 43

Recovery under Overlapping Policies 44

Redefining Policy Coverage in the Event of Other Insurance 45

XI. SUBROGATION 45

Purposes of subrogation 45

Operation of Doctrine of Subrogation 46

Castellain v. Preston 46

Wellington Insurance Co. v. Armac Diving Services 46

Exercising Right of Subrogation 47

IX. VALUATION 50

Introduction 50

Valued Policies 51

Re Art Gallery of Toronto and Eaton 51

Raymond v. United States Fire Insurance Co 52

Unvalued or Open Policies 52

Valuation Methods 53

Rising Replacement Cost and Inflation 53

Dispute Resolution Process 56

Future Contingencies 57

Leger v. Royal Insurance Co 57

Datatech Systems Ltd. v. Commonwealth Insurance Co 57

Newfoundland (Attorney General) v. Commercial Union Assurance Co of Canada 57

Partial Loss in Valued Policies 57

Re Art Gallery of Toronto and Eaton 58

Extent of Loss Suffered: Constructive Total Loss, Abandonment and Salvage 58

Limits on Liability in Open Policies 58

Sue and Labour Clauses 59

Benson & Hedges Ltd v. Hartford Fire Insurance 60

Office Garages Ltd v Phoenix Insurance Co of Hartford 60

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