A Brave New World: 2010 Amendments to B.C.'s Insurance Act
Authors: Nigel Kent and Krista Prockiw
Published: February, 2010
In 2003 a lawyer's negligence case resulted in the Supreme Court of Canada declaring that B.C.'s Insurance Act was "outmoded", "incapable of coherently addressing the modern multi-peril policy", and resulted in "unproductive, wasteful litigation about technicalities": KP Pacific Holdings Ltd. v. Guardian Insurance [2003] 1 S.C.R. 433 ("KP Pacific").
In KP Pacific the insured claimed for a fire loss under an all risk policy. The policy contained the standard statutory conditions mandated by the "Fire Part" of the BC Insurance Act which included the litigation limitation period of one year following occurrence of the loss. The question in the case was whether the limitation period was the one stipulated by the statutory condition or the longer limitation period stipulated in the "General Provisions" of the Act, namely, one year from the filing of a proof of loss. The more general issue was whether the modern all-risk policy was governed by the Fire Part of the Act (including the statutory conditions) or the General Provisions of the Act.
The Court ultimately held that an all-risk policy could not be "shoe-horned" into the Fire Part of the Act and instead applied the longer limitation period stipulated by the General Provisions (thereby saving the arguably negligent lawyer from liability for missing the limitation period). The Court noted the history of the legislation which was "built on the premise of discrete policies for discrete subject matters, with limited overlap" which was now an "outmoded paradigm incapable of coherently addressing the modern multi-peril policy". The Court urged,
"It is our hope that legislatures will rectify this situation by amending the Insurance Act to provide specifically for comprehensive [all-risk] policies. In an insurance era dominated by comprehensive [all-risk] policies, it is imperative that Canada's Insurance Acts specifically and unambiguously address how these statutes are to operate and the rules by which comprehensive policies are to be governed.
It would be highly salutary for the Legislature to revisit these provisions and indicate its intent with respect to all-risks and multi-peril policies. In the meantime, the task of resolving disputes arising from this disjunction between insurance law and practice falls to the courts. Brown and Menezes lament: "Surely there can be little which is less productive, or more wasteful, than litigation about such technicalities": C. Brown and J. Menezes, Insurance Law in Canada (2nd ed. 1991), at p. 16. I whole-heartedly agree."
It took a long time but in due course the legislatures of both Alberta and British Columbia responded to the challenge. Both provinces have passed legislation amending their respective Insurance Acts and, as at the date of this paper, both provinces are finalizing regulations to supplement the amendments. Once that is completed, likely in 2010, a new regime is going to govern property and casualty insurance.
This paper reviews the changes which are being brought into force in British Columbia. However, the changes in the Alberta legislation are very similar.
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