Deciphering A Seminal Insurance Coverage Decision

• Published date: 04 March 2024
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Class Actions
• Law Firm: Blaney McMurtry LLP
• Author: Mr Jason Mangano

Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, 2024 ONCA 145

Every decade or so, a decision of monumental importance to the coverage bar gets handed to us. In 2010, the Supreme Court of Canada gave us Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada. 2010 SCC 33. Before that? We had Alie v. Bertrand & Frère Construction Co. (2002), 222 D.L.R. (4th) 687 in 2002 from Ontario's Court of Appeal.

Today, we were given a gift: Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, 2024 ONCA 145. Here, the Court of Appeal for Ontario addressed complex issues regarding the allocation of defence costs among serial insurers, questions regarding time-on-risk in contract and equity, questions regarding relief from forfeiture and pre-tender defence costs, and conflicts of interest and defence reporting agreements. The decision - a whopping 121 pages and nearly 300 paragraphs - has an incredible amount of nuance that will likely fill a chapter in an insurance treatise and form the subject of industry-focused seminars for the next several years.

This article highlights the crucial takeaways most critical to the insurance bar moving forward.

A. Take-Aways

The Court was very clear that many of the issues engaged rose and fell on the specific wording at issue; it could not be said that there is a "one size fits all". No insurer should take it for granted that their circumstances automatically fall into the below. Consultation with coverage counsel is critical to tailoring the facts of Loblaw to your specific case.

Here are four significant points to consider from Loblaw:

• The pro rata time-on-risk allocation method is the appropriate method to apply for long-tail property damage or bodily injury claims: The Court of Appeal rejected the ability of the insured to "select" a single policy, opting for a pro-rata "time-on-risk" allocation method...