The Insurance Act’s alternative dispute resolution processes, whether it be “Appraisal” or “Dispute Resolution,” each define a method aimed at efficiently achieving a binding resolution. From Ontario to British Columbia, and possibly in the Maritimes, each province’s statutes outline how these disputes are to be resolved, as detailed in the Insurance Act of the province where the loss occurred.
Opinions on this matter vary widely:
- Some argue that a ruling from the Appraisal/Dispute Resolution Process (DRP) is all-encompassing, representing the one and only time an Insured can claim for their damages. Once the award is given, there is no ability to claim for additional damages.
- Others take a broader view, suggesting that an Insured is entitled to separate DRPs for different Heads of Coverage. For example, they could invoke a DRP on “Building” while continuing to work with the Insurer on other items such as “Contents,” “ALE,” and “Business Interruption.” Even in this interpretation, the process concludes the specific Heading of Coverage.
- Some insist that a “Final Proof of Loss” must be filed before the DRP process can begin.
A recent ruling from the Court of Appeal for Ontario has provided clarity. Justices Gillese, Tulloch, and Roberts unanimously agreed in their response to an appeal in Truscott v. Co-Operators General Insurance Company. Their ruling, dated April 19, 2023, offers guidance:
Interim Proofs of Loss
For those familiar with Campbell v. Desjardins, 2020 ONSC 6630, aff’d in part, 2022 ONCA 128, a decision upheld on appeal, it is already known that filing a proof of loss “as soon as practicable” is not strictly defined, but is flexible in interpretation, fact-based, and situationally determined. The objective of the DRP is consumer protection, and relying solely on estimates can be detrimental to the consumer. This ruling, along with Senator Real Estate v. Intact Insurance, 2021 ONSC 200 (Div. Ct.), highlights that “interim” proofs of loss can be submitted to trigger a request for Appraisal (DRP).
The obvious question then arises: How can a process intended to resolve an insurance claim proceed with interim Proofs of Loss?
The Myth: An Award Settles the Head of Damage or Settles the Claim
The answer lies within the question. The Ontario Court of Appeal clearly states that the Appraisal process (and by extension, Dispute Resolution) is not intended to “settle the claim.” Rather, it is a process to resolve “matters in dispute.” The Truscott v. Co-Operators ruling emphasizes this point:
“…the appraisal process contemplated by the Insurance Act is not a “one-shot” valuation. Rather, it permits an umpire to specifically confine an appraisal award to identified loss claims known at the time of the appraisal.”
The decision further states:
“Interpreting the legislation in this way respects: the wide latitude given to an umpire to determine how the appraisal process is conducted; the intention underlying the appraisal scheme to provide an easy, expeditious, and cost-effective means of settling claims for indemnity under insurance policies; and, that this is consumer protection legislation.”
The Insured’s appeal in this case stemmed from the lower court’s misapplication of the law, largely due to incorrect determinations regarding the effect of the Umpire’s rulings in the Appraisal process. The appeal court found that the Umpire operated within his mandate and took great care to clarify what the ruling covered and what it did not address, thereby avoiding any potential confusion.
Concluding Opinion
The Appraisal or Dispute Resolution ruling is intended to address the specific matters in dispute. Its purpose is not to settle the entirety of a Heading of Coverage, let alone the entire insurance claim—though it can.
Good law makes us better, and this ruling not only clarifies the process but also removes much of the confusion surrounding the Appraisal/Dispute Resolution Process.