Do you own a business? Most insurance coverage for business related losses and liability is available through a commercial general liability (CGL) policy and other types of specialized business insurance coverage. However, there are time-limits to make a claim and if the claim is denied, to sue the insurance company. It is for this reason that it’s important to speak to a tort claims lawyer as soon as possible.

In Boyce v. The Co-Operators General Insurance Company, 2013 ONCA 298 (CanLII), the plaintiffs owned and operated a woman’s fashion boutique called “Portside Boutique”, which was insured by the defendant (“Co-Operators”) since 2000. The plaintiffs’ boutique was vandalized on October 30, 2010. The plaintiffs filed a proof of loss claim in December 2010 for business interruption, clean-up costs, and loss of inventory. Co-operators denied the claim blaming an unidentified skunk. The plaintiffs issued a Statement of Claim in February 2012, more than one year, but less than two years, after the incident.

Co-Operators moved for summary judgment, claiming that the action was time barred (meaning it was too late to sue), relying on the one-year statutory limitation period in s. 148 of the Insurance Act, R.S.O. 1990, c. I8. Co-Operators relied on the contractual provisions in the policy incorporating the one-year limitation set out in the Insurance Act.  The motion judge held that the provision in the policy limiting coverage to claims made within one year of the loss did not override the statutory two-year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24 lacked specificity to override the statutory limitation period and that in any event, the contract of insurance was not a “business agreement” as required under s. 22(5) of the Limitations Act, 2002.

The Court of Appeal disagreed and allowed the appeal and held that the contract of insurance not only provided for a one-year limitation period in clear and unambiguous language, it overrode the two-year limitation period in the Limitations Act, 2002.  Specifically, s. 22(5) of the Limitations Act, 2002 allows parties to vary or exclude, by agreement, the otherwise applicable statutory limitation period; albeit it only applies only to “business agreements” as defined in s. 22(6).

With respect to the issue of whether a contract of insurance is a “business agreement”, the Court of Appeal concludes:

[25]      The respondents contracted with Co-Operators for insurance covering various risks related to the operation of their business.  The contract was not “for personal, family or household purposes”.  The contract fell within the definition of “business agreement” in s. 22(6) of the Limitations Act, 2002.

Implications 

Arguably, contracts of insurance are not fairly characterized as business agreements. There is no equality of bargaining power between the insured and the insurer. There is no negotiation of the wording of the insurance policy: the statutory conditions, declarations and exclusions are carved in stone. There are riders and endorsements that allow for some flexibility in scope of coverage, but it is difficult to reconcile the Court of Appeal’s reasoning with principles of contract interpretation.

That said, the Court of Appeal for Ontario has spoken. Do not assume that the general 2-year limitation period applies to your business insurance loss claims.

The experienced personal injury lawyers at Himelfarb Proszanski are able to assist you in making a timely business insurance loss claim to your insurance company, but don’t wait until it’s too late.