Attached below is a link to yesterday’s Ontario Court of Appeal decision in Boyce v. Cooperators General Insurance Company which is the first appellate consideration of whether the one year limitation period in the Statutory Conditions usually contained in property policies trumps the otherwise applicable two year limitation in the Ontario Limitations Act.
It was conceded by the parties that the one year limitation period in the Statutory Conditions of the fire insurance part of the Ontario Insurance Act was not applicable because the policy at issue was a multi-peril policy and thus not a “fire” policy under the Insurance Act. However, the court held that the Statutory Conditions, including the one year limitation period contained therein, could be expressly incorporated into the insurance contract by “clear and unambiguous language” and found that such had been done in this case.
The issue then became whether the one year limitation trumped the otherwise applicable two year limitation in the Limitations Act and the court held that it could provided the insurance contract constituted a “business agreement” within the meaning of the Act. In short, a “business agreement” is defined as an agreement made by parties none of whom is a “consumer”, with “consumer” defined as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.” As the insurance in this case related to a business (a woman’s fashion boutique) and was not a contract for “personal, family or household purposes”, the one year limitation applied and the claim was time barred.
The following now appears to be established for property policies in Ontario:
- If the policy does not expressly incorporate the Statutory Conditions and is otherwise silent on the applicable limitation, the two year limitation period in the Limitations Act will apply;
- If the policy expressly incorporates the Statutory Conditions, the shorter one year limitation will apply if the subject matter of the insurance relates to business purposes; and
- Where the subject matter of the insurance relates to “personal, family or household purposes”, the two year limitation under the Limitations Act will apply, even if the policy expressly incorporates the Statutory Conditions. Although the court in Boyce did not specifically address this, it is self-evident that personal homeowner’s insurance would fall into this category and thus always be subject to the two year limitation.
This is a significant decision that has now clarified what has been a murky area ever since the Limitations Act came into effect in 2004.