A reminder to insurers that Section 4 of the Insurance Regulation, pursuant to the new B.C. Insurance Act, is now in place as of July 1, 2012. This section requires that insurers notify an insured of any applicable statutory limitation periods that may apply in respect of the insurance contract.
The notice must include several key elements:
1. It must be in writing;
2. It must advise of the applicable limitation period (pursuant to either s. 23. 76 or 104 of the Act);
3. It must contain a statement that “the limitation period is set out in the Insurance Act”.
Unfortunately, the wording of the timing section for notification in the original Regulations was unclear. However, as of December 19 2012, an amendment to the Regulations has been in force to clarify this issue. Based on the revised Regulation, notification must occur:
1. 5 business days after the insurer denies liability for all or part of the claim;
2. 10 business days after the first anniversary of the date the insurer receives notice of a claim or of an action under s. 25 of the Act, unless the insurer has already given the 5 days’ notice as per (1) above, or adjusted the loss and settled the claim.
This section applies to all insurance contracts, except accident and sickness insurance in respect of health care. The only exception to the notification provision is where the insured is represented by counsel, presumably because it is then counsel’s obligation to inform their client accordingly.
The penalty for failing to abide by the notification provision is a suspension in the running of time for the limitation period until:
(a) the date that notice is given;
(b) the date that would cause the limitation period to exceed 6 years after the date the cause of action against the insurer arose.
Therefore, where an insurer is denying a claim for coverage, it may wish to include in its denial letter a section advising the insured of the applicable limitation period, with a reference to the Insurance Act. In this way, the insurer has complied with the notification provisions and starts the clock running on the limitation deadline.