Plaintiff’s personal injury lawyers must do a better job at pinning down tort defendants’ insurance limits and identifying potential coverage issues from the outset to determine whether or not to advance a claim as against any underinsured policies.
On May 14, the Ontario Court of Appeal released its decision in
Roque v. Pilot Insurance Co. In Roque, plaintiff’s counsel found out well after the two-year post-accident limitation period that the tort defendant had only the minimum coverage of $200,000. Within two years of learning of the minimum coverage, plaintiff’s counsel brought a claim against his underinsured carrier but faced a limitation defence.
Plaintiff’s counsel argued that his obligation to claim against the underinsured carrier only arose when he knew the claim was above the defendant’s $200,000 policy limits. However, Justice Russell Juriansz, writing for a unanimous panel, disagreed and confirmed that the limitation period as against the underinsured carrier starts when there’s a body of evidence that would provide a “reasonable chance” of persuading a judge that the claims would exceed the defendant’s policy limits.
He also ruled that more than two years had passed since then. The appeal court proceeded to uphold the judgment and threw out the claim against the underinsured carrier.
More importantly, the Court of Appeal discussed the process of making claims against underinsured carriers. It highlighted the obligation of a defendant under s. 258.4 of the Ontario Insurance Act to promptly respond to a notice of claim by advising the claimant of its liability limits and whether the policy will respond to the claim.
The appeal court then stated that if an insurer fails to comply with these obligations, it would be prudent for plaintiffs to commence an action against their own insurer and discontinue it later if necessary.
When it comes to the issue of verifying the defendant’s policy limits, the Ontario Court of Appeal’s comments are appropriate, namely that plaintiff’s counsel should engage the underinsured carrier as a precaution when the information isn’t forthcoming. However, lawyers must not read the decision as an extension of plaintiff’s counsel’s obligation to make underinsured claims in circumstances where they haven’t unequivocally confirmed coverage.
Insurers typically respond to notice letters by expressly reserving the right to take an off-coverage position depending on the results of an ongoing investigation. There should be no obligation on plaintiff’s counsel to foreshadow potential insurance coverage issues and engage their underinsurer in these common circumstances.
Hopefully, there’s an understanding that claimants can rely on the standard confirmation of coverage subject to responses around further investigation. But if insurers suggest otherwise, plaintiff’s counsel will simply have to issue against their underinsured carriers in almost all cases.
Darcy Merkur is a partner at Thomson Rogers in Toronto practising plaintiff’s personal injury litigation. He has been certified as a specialist in civil litigation by the Law Society of Upper Canada and is the creator of the personal injury damages calculator.
