Common law contract and principles require an insurer's duty of good faith to an insured. The Ontario Court of Appeal (the "Court") has recently confirmed that this duty does not include a general obligation to provide notice of an insured's limitation periods and for bringing a coverage claim against the insurer.

The Court l has recently confirmed that where there is no statutory provision to the contrary, the window of time in which an individual can sue their insurer remains open for two years. In 2017, the Court held that insurance providers do not have a duty to inform insureds of pending limitation periods. The Court ruled that deciding otherwise would have the effect of rewriting the general statutory limitation period for insurers – limitation periods would essentially be on pause until the insurer complied with the notice requirement.

In Usanovic v. Penncorp Life Insurance Co., an insured brought legal action against his disability insurer to challenge the termination of his benefits after the expiry of the two-year limitation period. In November 2011, the insurer determined that the insured no longer suffered from the requisite level of disability under the policy. The insurer's lawyers contacted the insured in January 2012 to inform him of the change. Three years later, in early 2015, the insured contacted his lawyer to oppose the decision. Notably, he failed to commence legal action against the disability insurer until April 2015, well after two years from the date the insured first learned that his plan was cancelled.

The Court l agreed with the insured that the insurance provider owed a duty of good faith in contract that includes the duty "to act both promptly and fairly when investigating, assessing and attempting to resolve claims made by its insureds". However, it held it is not an insurer's duty to warn an insured that their time is running out to sue the insurer. In deciding this, the Court noted that both British Columbia and Alberta have statutes that expressly require insurers to do so. In contrast, the Ontario legislature has not chosen to enact such a requirement. The Court held the judiciary should not take it upon itself to do so in government's place.

Essentially, the Court based its decision on the fact that imposing such a requirement is a political matter, not a legal one. In the absence of express statutory language that the legislature wishes to impose a notice requirement on insurers, the courts will not do so at this time.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.