Variation of Insurance Limitation Periods

Articles

The Ontario Court of Appeal, in Daverne v. John Switzer Fuels Ltd., 2015 ONCA 919,  held that a contractual one-year limitation period, as established in a commercial general liability policy overrode, and shortened, the applicable statutory two-year limitation period, as established in the Ontario Limitations Act, S.O. 2002, c. 24 (the “Ontario Limitations Act”). The Court of Appeal relied on a “business agreements” exception under section 22 of the Ontario Limitations Act.

Based on a reading of the British Columbia Limitation Act, SCBC 2012 (the “BC Limitations Act”), and the British Columbia Insurance Act, RSBC 2012 (the “BC Insurance Act”), it appears that it may not be possible to shorten a limitation period that is established by the BC Insurance Act.

Application to British Columbia

The BC Limitations Act establishes certain limitation periods in British Columbia. However, the BC Limitations Act is not the only legislation that establishes limitation periods in the province. Various limitation periods are established in other legislation, including, but not limited to, the BC Insurance Act,  which provides, in part, as follows:

“3  (1) An insurer must not make a contract that is inconsistent with this Act.

….

6 (2) A limitation period established under this Act in respect of an action or proceeding on a contract may be varied by a contract to provide a longer period.”

Section 3(1) of the BC Insurance Act provides that an insurer must not make a contract that is inconsistent with the BC Insurance Act.  Section 6(2) of the BC Insurance Act specifically permits the lengthening, but not the shortening, of limitation periods established under the BC Insurance Act.   There is nothing in the BC Insurance Act that expressly allows parties to shorten limitation periods.  Accordingly, it appears that an insurance policy that purported to shorten a limitation period that was established under the BC Insurance Act would be inconsistent with the BC Insurance Act, and likely unenforceable.

Before attempting to contractually shorten any limitation period that is established by the BC Insurance Act, we recommend consulting a lawyer.