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Deadline Dilemmas: Lessons Learned in Insurance Claim Management

Case citation: Aviva Insurance et al v. Sahara Restaurant, 2024 ONSC 1415

In Aviva Insurance et al v. Sahara Restaurant, 2024 ONSC 1415, a recently released decision, the Ontario Superior Court decides two applications in favor of the Insurer. The decision sheds light on crucial aspects of insurance claims management and the legal responsibilities of insurers.

On January 1, 2018, a water pipe burst in the Insured’s restaurant, resulting in damage to the restaurant and significant business loss. That very same day, the Insured reported the loss to its Insurer. Based on the policy, there was a one-year limitation period to commence a claim which expired on January 1, 2019. The Insurer notified the Insured on May 30, 2018 and again on August 20, 2018 of its upcoming limitation date. The Insurer paid out some of the claims and rejected other parts of the claim that were not covered by the policy.

On July 29, 2019, the Insured demanded an appraisal regarding the rejected claims but the Insurer refused the appraisal as the limitation period had expired. The Insured issued a Statement of Claim against the Insurer on January 29, 2020. The Insurer applied for a declaration that the limitation period expired on January 1, 2019. The Insured applied a declaration to compel the Insurer to participate in an appraisal.

The Insured argued that the words and conduct of the Insurer were interpreted as a promise not to rely on the one-year limitation period. The Court reviewed the communications and held that the Insurer’s dealings with the Insured were normal dealings between parties attempting to resolve an insurance claim and the Insurer took no action nor made any statements to suggest to the Insured that they would not be relying on the one-year limitation period. The Court held the Insurer had done nothing wrong. The Insured argued its demand for an appraisal suspended the one-year limitation period.

The Court decided the Insured’s claim against the Insurer was statute-barred and was dismissed. The Insured’s application to compel the Insurer to participate in the appraisal process was also dismissed.

This case is important for insurers. When a loss occurs and part or all of the claim is denied, insurers should notify insureds of limitation periods and refrain from dealings that may constitute as a waiver of the limitation period. This obligation has been codified in Alberta’s Fair Practices Regulation.


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