Important Changes to the Insurance Act

The Alberta legislature made important changes to the Insurance Act that will come into force on July 1, 2012. The amendments made in the Insurance Amendment Act (“IAA”) continue to promote consumer protection.

The most notable change in the IAA is that it now calls for a two year limitation under all types of contracts of insurance. Previously, under the Insurance Act, there were a handful of instances where a one year limitation would apply. For example, under s.549, statutory condition 14 provided a one year limitation with respect to loss or damage in relation to fire insurance. Now under the IAA, claims made under general property insurance (which cover damages from fire) must be made within two years from the point the loss or damage was discoverable. With respect to automobile insurance a claim must be commenced within two years from the occurrence of the loss or damage.

Along this line, the Fair Practices Amendment Regulation imposes an obligation on insurers to give written notice to a claimant of the applicable limitation period. An insurer must provide written notice of the applicable limitation period within five business days from the date the claimant’s claim is denied.

Adding to the obligations of insurers, s.5.1 of the Fair Practices Amendment Regulation provides that a lawyer retained by the plaintiff in an action arising out of an automobile accident must, within thirty days of the action being filed, give notice to the defendant’s insurer that a lawyer has been retained. Following this notice the defendant’s insurer must disclose the liability limits under the policy. These provisions are prospective and apply to automobile accidents occurring “on and after” July 1, 2012. Liability limits under the policy must not be disclosed to a judge or jury until after judgment is given.

The IAA removes fire insurance exclusions that relate to the cause or circumstances of the fire. Section 545(3) states that an insurer cannot provide in a contract, that includes coverage for loss or damage by fire (or by another prescribed peril), an exclusion relating to the cause of the fire (or other peril) or the circumstances of the fire (or other peril). Unless it is a prescribed exclusion under the regulations, a policy exclusion contrary to s.545(3) is invalid.

Under s.547 of the IAA, if a record is required or permitted to be provided to a person personally, by mail or by any other means, the record may be provided to the person in electronic form. If a record is provided in electronic form it is deemed to have been sent by registered mail.

Section 541 of the IAA offers protection to innocent persons. Exclusions of coverage for loss or damage to property caused by criminal acts, intentional acts or omissions apply only to the person who by an act or omission caused, abetted or colluded; or, consented and knew (or ought to have known) that the act or omission would cause damage. A person that does not fall within one of the above categories must co-operate with the insurer by submitting to an examination under oath and producing all documents related to the loss.

Having regard to the above, the Insurance Amendment Act and the regulations result in additional obligations to be fulfilled by insurers with the ultimate goal of enhancing consumer protection.