Construction is a risky business. Having the right insurance in place is therefore essential for everybody engaged in the process.
It is also critical that you understand the basic operation of your insurance policies and have some understanding of the legislation that governs insurance.
Insurance in Canada is governed by provincial insurance acts that lay out ground rules for insurers. In B.C., we have a new Insurance Act that you should be aware of. The new act is the result of a 2003 decision of the Supreme Court of Canada in which the Court described B.C.’s Insurance Act as an “outmoded” statute that leads to “unproductive, wasteful litigation about technicalities”. The court urged the B.C. Legislature to rectify this situation by amending the act. In 2009, the legislature got around to doing so and in July of this year the new B.C. Insurance Act became law.
Here are 10 things you should know about the new Insurance Act.
- Two years is the new norm for actions for insurance coverage from the date the insured knew or ought to have known the loss or damage occurred or, in the case of a liability policy, from the date the cause of action against the insurer arose.
- Insurers must give notice of the applicable limitation period within five business days of denying liability or within 10 business days after the first anniversary of the date the insurer receives a claim.
- A denial of coverage on the basis of an exclusion clause, even where that exclusion clause is material to the risk insured against, may not be binding if, at a later date, a court determines that it is either unreasonable or unjust.
- Where there is more than one insured person under a policy, an intentional or criminal act may not exclude coverage for all insured persons.
- The act now provides for “proportional” coverage for innocent insureds up to the value of the innocent insureds interest in the property.
- The only exclusions allowed in fire policies are those exclusions specifically detailed in the regulations to the new act.
- Insurance policies issued by insurers must be in accordance with the written or oral application by the insured unless the insurer immediately gives notice to the insured in writing of any differences between the application or the proposal and the policy. Disputes between insurers and insureds, including coverage disputes, can be resolved by way of a dispute resolution process contemplated in the act.
- The service of most documents can be done electronically however, this provision does not apply with respect to an insurer’s notice terminating a contract under either a statutory condition or for non-payment of premiums. In those circumstances, service of documents is to be done personally or by registered mail.
- There is a 30 day grace period now mandated for payment of overdue premiums on life and health insurance contracts.
- There is a new “cooling off period” which allows a person who purchases a life or accident and sickness policy to rescind it within 10 days from the date of receiving the policy.
Keep in mind that the Insurance Act contains the background rules under which insurance operates. To fully understand your rights under a policy you need to read its terms and seek advice from your insurance professional or legal counsel.
Insurance is only boring until you need it.
This article, co-authored by Norm Streu, President and Chief Operating Officer of the LMS Reinforcing Steel Group, first appeared in the Journal of Commerce on November 26th, 2012.