The Court of Appeal for Ontario has released a decision determining when the limitation period starts to run for underinsurance claims under the OPCF 44R (Family Protection Endorsement).

In Schmitz v. Lombard, the plaintiff was struck by a vehicle in July 2006. In June 2007, he and members of his family sued the driver for damages in excess of $1,000,000 arising out of the injuries Schmitz sustained in the accident. In June 2010, the driver’s automobile insurance coverage was limited to $1,000,000.  The respondents then brought this action against Lombard for indemnity under the OPCF 44R for any amounts found owing to them that were in excess of that amount (up to his limits of $2,000,000).

In its statement of defence, Lombard pleaded that the action was commenced after the expiry of the 12-month limitation period in s. 17 of the OPCF 44R. The plaintiffs relied on the two-year limitation period set out in s. 4 of the Limitations Act, 2002. They moved under Rule 21 for a determination of the limitations issue.

The questions before the motion judge were 1) whether the 12-month limitation period in s. 17 of the OPCF 44R was displaced by s. 4 of the Act, and 2) when the limitation period began to run in respect of claims for underinsurance coverage pursuant to the OPCF 44R.

Relying on the Court of Appeal’s decision in Markel v. ING (2012), the motion judge concluded that a two-year limitation period applicable to claims under the OPCF 44R started to run when the claimant made a request for indemnification under the OPCF 44R.  He reasoned that this commencement date met the requirement in s. 5(1)(ii)-(iii) of the Act that the loss be “caused” by the “omission” of Lombard.

The Markel decision decided when the limitation period starts for loss transfer claims. The Court of Appeal held that it starts the day after the second party insurer receives a loss transfer request for indemnification. The basis for that decision was that the criteria under section 5 of the Limitations Act, 2002 (when a claim is discovered) were not satisfied until that day, being the date that the first party insurer suffers a “loss” as a result of the second party insurer’s “omission”.

Lombard’s appeal was limited to its challenge of the motion judge’s ruling that the two-year limitation period under s. 4 of the Act “commences to run when the claimant makes a request for compensation provided by OPCF 44R”.

The Court of Appeal dismissed Lombard’s appeal and held that the two-year limitation period begins to run the day after the insurer receives a claim under the Family Protection Endorsement. Following the decision inMarkel, the court held:

Once a legally valid claim for indemnification under the OPCF 44R is asserted, the underinsured coverage insurer is under a legal obligation to respond to it.  To paraphrase and adapt Sharpe J.A.’s observations at para. 27 of Markel, the claimant for indemnity under the OPCF 44R “suffers a loss from the moment [the insurer] can be said to have failed to satisfy its legal obligation [under the OPCF 44R]”.  Thus, the claimant suffers a loss “caused by” the underinsured coverage insurer’s omission in failing to satisfy the claim for indemnity the day after the demand for indemnification is made.

Accordingly, the Court of Appeal held that the limitation for underinsurance claims under the OPCF 44R starts on the day after the insurer receives a claim under the Family Protection Endorsement.

Like Markel, this case highlights the need to look at the criteria under section 5 of the Limitations Act, 2002 to determine when a limitation period might start. The start date may not always be so obvious.

See Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88.