November 26, 2024
Chances are that you have an insurance policy that includes protection against claims by others. This includes a right to a defence at the cost of the insurer. If there is uncertainty about coverage, the insurer is often ordered by a court to fund the defence, subject to a reallocation after the lawsuit is finished. Tenants policies, homeowners’ coverage and commercial packages typically all include this coverage.
A basic requirement to obtain this protection when you are faced by a claim is that you must give prompt notice to your insurer, to allow them to investigate and defend the claim properly.
THE ISSUE
What happens if you do not do this?
You may forfeit your rights to a defence by the insurer.
THE CASE
This risk is illustrated in the Ontario Court of Appeal decision in Kerk-Courtney v. Security National Insurance Company (TD General Insurance Company).
In that case, the plaintiffs were sued as defendants in an underlying action arising from a house sale. Among the claims in the underlying action were claims for negligence or negligent misrepresentation. The Court determined that these claims might be within the policy coverage, and that the insurer’s duty to defend would be triggered.
Except…
… the underlying action was commenced in 2018, and the plaintiffs did not notify the insurer until 2021.
The policy stated that notice must be given “promptly”. The plaintiffs argued that they did not know the true nature of the claims until after examinations for discovery. The fact that the plaintiffs
failed to appreciate that the Underlying Action related to allegations of negligence as well as intentional acts did not suspend the reporting obligation. A claim for negligent misrepresentation was clearly asserted in the statement of claim.
The Court further found that the delay was unreasonable, which meant that relief from forfeiture was unavailable. The insurer was entitled to deny coverage.
TAKEAWAYS
- It is never a good idea to sleep on your rights
- If you even suspect that you have an insurance claim, you should immediately give notice to the insurer.
- If you are unsure, getting legal advice is a sound investment.
WHAT WEILERS LLP CAN DO TO HELP YOU
At Weilers, we have experience dealing with lawsuits of most sorts. We have experience reading insurance policies and know insurance law. If you have damage to your property, or are sued by someone else, we can give you the advice you need. If you require help dealing with your insurer, you may give us a call at Weilers LLP. We do not help you for free, but our fees are often a sound investment. If we cannot help you economically, we will let you know.