Insurance Claims – Watch out for the Limitation Period!

Our readers may know that the limitation period for most types of claims in Ontario is two years. This means that the claim must be started (by court process) within two years from when the claimant discovers or ought to have discovered the basis for the claim. Otherwise, the right to assert the claim is likely lost.

However, for many insurance claims, the limitation period maybe shorter.

Condominium corporations are sometimes required to consider claims against their insurers. For instance:

(a)    When damage is caused to the common elements or standard units, repairs may be covered by the corporation’s property insurance.

(b)   When a claim is made against the condominium corporation and/or directors, the condominium’s insurer may have a duty to defend the claim (and may have a duty to pay any judgment).

In such cases, condominium corporations must be careful to preserve their claims. In particular:

  1. As a first step, the insurer must be given prompt notice of any such claim or potential claim against the insurer.
  2. In addition, if there is any doubt or possible doubt about the insurer’s acceptance of the claim, the condominium corporation must start the claim against the insurer (by court process) within the applicable limitation period. And, for purposes of this second step, here’s the key point: The limitation period for such insurance claims may be shorter than the typical two-year limitation period.

The Courts have said that the limitation period for insurance claims can be determined in the insurance contract/policy. For example, many insurance policies contain one-year limitation periods (from the date of a loss) for claims against the insurer. Some policies contain one-year limitation periods under both the property insurance coverage and the liability insurance coverage.

The bottom line is as follows: Whenever you are confronted with a claim or potential claim against your insurer, be sure to consider the two steps noted above, and also be sure to check the limitation period in the policy. Again, if a claim against the insurer is necessary, it must be started by court process within the limitation period noted in the policy.

To read more about condominium insurance, check out our previous blog post.