Insurance Bulletin: BC Insurance Amendment Act, 2009, Comes Into Force July 1, 2012

Introduction

This paper summarizes the legal and legislative history resulting in the coming enactment of the BC Insurance Amendment Act, 2009, effective July 1, 2012. It will then review some of the more significant changes which are:

Restructuring of the Act and the elimination of Part 5-Fire Insurance and the merger with the General Insurance Provisions The implementation of statutory conditions to all contracts under the General Insurance Provisions Limitation periods Relief from forfeiture Unjust or unreasonable conditions Dispute resolution Proportionate contributions Restrictions on exclusions for fire Recovery by innocent persons Electronic communications Notification of limitation periods The Long Road to Enactment of the BC Insurance Amendment Act, 2009

In KP Pacific Holdings Ltd v. Guardian Insurance Co. of Canada, 2003 SCC 25, the Supreme Court of Canada observed that the BC Insurance Act of 1925 had remained essentially unchanged since it was passed. Although insurance practices had changed substantially over the past eight decades, the Insurance Act had not, and was still based on outmoded classes of insurance in which different rules applied depending on discrete categories of insurance. Thus, in a fire loss case, difficulties arose determining whether the applicable limitation period was in Part 2-General Provisions (one year from the providing of reasonably sufficient proof of loss) or Part 5-Fire Insurance (one year from the date of loss). In the result, the Court held that modern policies such as the multi-peril policy could not be reasonably "shoehorned" into Part 5 and thus the longer limitation periods in Part 2 applied.

In the course of attempting to penetrate the "tangled historical thicket" of statutory interpretation, over which "much ink" had been spilled, the Court said:

"It would be highly salutary for the Legislature to revisit these provisions and indicate its intent with respect to all risk and multi-peril policies. In the meantime, the task of resolving disputes arising from the disjunction between insurance law and practices falls to the courts. . .To repeat, it is our hope that legislators will rectify the situation by amending the Insurance Act to provide specifically for comprehensive policies. In an insurance era dominated by comprehensive policies, it is imperative that Canada's Insurance Acts specifically and unambiguously address how these statutes are to operate and the rules by which comprehensive policies are to be governed. "

This led to a lengthy review of the Insurance Act and the Insurance Act Review Discussion Paper published by the Ministry of Finance in March 2007 seeking input into proposed changes. As stated in the Discussion Paper, the primary objectives were to "maintain and enhance consumer protection and to ensure that the rights and obligations of the parties to the contract are well-understood and clear." Most of the...