For many years lawyers on both sides of the personal injury bar debated the applicable limitation period, and when it begins to run, for claims made by a Plaintiff against their own insurer arising from car accidents involving either uninsured, unidentified or underinsured defendants. In the past, insurers have sought to rely on the twelve month limitation period contained in an insured’s personal automobile policy, found in paragraph 17 of the OPCF-44R of that policy. In contrast, Plaintiff counsel has long argued that s. 4 and 5 of the Limitations Act, 2002, should apply and override this provision. The Limitations Act imposes a basic two-year limitation period on all claims arising in the Province of Ontario, beginning on the date at which a claim is said to have been ‘discovered’.
The debate on this question was put before the Courts in the case of Schmitz v. Lombard and some much needed clarification was provided. In Schmitz, the Plaintiff was injured in a car accident in 2006. The initial claim was issued in 2007 and claimed damages from the Defendant in excess of $1 million. The Defendant’s car insurance third-party coverage was limited to $1 million. However, the Plaintiff’s own policy of insurance with Lombard included underinsured motorist coverage to a maximum of $2 million. In June 2010, approximately four years post-accident, the Plaintiff sought to access this policy and issued a claim against Lombard for underinsured coverage. In response, Lombard brought a motion before the Court to have the action dismissed on the basis that the claim was commenced after the expiry of the twelve-month limitation period contained in section 17 of the OPCF-44R.
The lower court dismissed the motion and the decision was appealed by the Defendant. At the Court of Appeal, the Defendant agreed that s. 4 of the Limitations Act was the appropriate limitations period. Instead, the Defendant argued that s. 5’s discoverability principles applied and the limitation period began to run from the time the Plaintiff knew or ought to have known that his claim would exceed the $1 million coverage limits. The Court of Appeal rejected this argument and dismissed the appeal. In its reasoning, the Court ruled that limitation period did not start running until the Plaintiff demanded payment from the Defendant. Put another way, a Plaintiff suffers a loss from the moment the insurer can be said to have failed to satisfy its legal obligation under the policy.
While the Lombard decision provided much needed clarification for the application of principles of discoverability in cases involving underinsured coverage, questions still remained as to the applicability of its principle to claims involving unidentified drivers. This issue was addressed in the Chahibe v. Grybas decision. The decision involved a motion by the Plaintiffs to add their own insurer, Primmum, as a Defendant under the unidentified provisions of their policy.
The Plaintiffs were involved in a collision on December 16, 2010, at which time their vehicle was rear-ended. At that time, the Plaintiffs had no knowledge of the involvement of any other vehicles as they were taken immediately to hospital. Following issuance of the Statement of Claim, in July 2013, counsel for the named Defendant advised of the involvement of an unidentified third party in the accident as evidenced by a copy of the complete police report. The Plaintiffs brought this motion in July 2014 and it was contested by Primmum on the basis that the limitation period had expired. In support of its position, Primmum argued that the Plaintiff had failed to satisfy its onus of due diligence to obtain the necessary information to include the proposed Defendant within two years of the accident.
The Court in its decision found that the reasoning in Schmitz applied in this case stating that:
…unlike the claim of an injured party against a tortfeasor when the limitation period commences to run when the injury occurs or when the Plaintiff knew or ought to have known of the injury, the claim of an insured against his own insurer is a claim under a contract. There is no claim until the insurer has breached its contract to indemnify the Plaintiff by refusing to pay the Plaintiff’s claim.
The reasoning in Schmitz applies in this case. The Plaintiffs do not know they have a claim against the insurer until they know: that the accident was caused by an unidentified vehicle; that there is no other third party liability section of a policy under which they could recover; and a demand is made of the insurer and that the insurer has denied the claim.
A second decision involving the limitation period for adding one’s own insurer for unidentified coverage is Platero v. Pollock. In this decision, the Defendants St. Paul Fire and Marine Insurance Company moved for an order for summary judgment dismissing the Plaintiff’s claim against it on the basis that the claim was barred by the Limitations Act.
In this case, the Plaintiff was injured in a motor vehicle accident on August 11, 2007, while riding as a passenger in a bus. The Plaintiff commenced an action by way of notice of action on August 10, 2009. The Plaintiff sought to amend her claim on August 22, 2012, to add St. Paul’s for unidentified coverage. Evidence provided at the motion by the proposed Defendant indicated that the Plaintiff and her counsel were aware of the possible involvement of an unidentified defendant well in advance of the motion.
In the decision, Justice Leich reviewed the decisions in both Schmitz and Chahine and adopted the principle coming from those decisions, stating
…the plaintiff suffers a loss when St. Paul fails to satisfy its legal obligation under the policy. Putting it another way and again paraphrasing the Court of Appeal in Markel and Schmitz, the plaintiff will suffer a loss caused by St. Paul’s omission in failing to satisfy the claim under its policy the day after demand is made of St. Paul provided at that time there is no other third-party liability section of a policy under which she could recover (there being no issue that the plaintiff knows that the accident was caused by an unidentified vehicle).
For Plaintiffs, these decisions provide some much needed guidance on limitation periods for indemnification claims against their own insurers. It is important for individuals seeking to bring a claim arising from a motor vehicle accident to consult with an experienced lawyer to help determine what limitation periods are applicable to their action.
Michael Wolkowicz