Notice of Limitation Periods

A new Insurance Act (the Act) and Insurance Regulation came into force in British Columbia on July 1, 2012.

The Act required insurers to notify insureds of the limitation period that applies to their claim. At Harper Grey's Annual Insurance Seminar in June 2012, we highlighted a few irregularities in the wording that made it unclear exactly when insurers are required to give this notice to insureds.

The government of British Columbia has now amended the wording of s.4 of the Insurance Regulation to address the issue. The revised wording is as follows:

--------------------------------------------------------------------------------

4. (2) An insurer must give written notice to a claimant of the applicable statutory limitation period

(a) at the time or within 5 business days after the insurer denies liability for all or part of the claim, and

(b) at or within 10 business days after the first anniversary of the date the insurer receives notice of a claim or of an action under section 24 of the Act, unless the insurer has already

(i) adjusted the loss acceptably to the claimant or settled the claim, or

(ii) provided notice to that claimant under paragraph (a).

--------------------------------------------------------------------------------

With the changes, it is now clear that the insurer is required to give the insured notice of the limitation period either (1) when denying the claim or (2) at the one-year anniversary of receiving notice of the claim, if the claim hasn't been settled already or denied with notice being given at the time of the denial. The reference to section 24 of the Act relates to actions by a third party directly against an insurer and notice of the limitation period is also required in those circumstances.