Here’s a wake-up call for those of you handling breach of insurance contract claims under commercial general liability (CGL) and other types of business insurance policies for clients.
In Boyce v. The Co-Operators General Insurance Company, 2013 ONCA 298 (CanLII), the plaintiffs owned and operated a woman’s fashion boutique called “Portside Boutique”, which was insured by the defendant (“Co-Operators”) since 2000. The plaintiffs’ boutique was vandalized on October 30, 2010. The plaintiffs filed a proof of loss claim in December 2010 for business interruption, clean-up costs and loss of inventory. Co-operators denied the claim blaming an unidentified skunk. The plaintiffs issued a Statement of Claim in February 2012, more than one year, but less than two years, after the incident.
Co-Operators moved for summary judgment, claiming that the action was time barred, relying on the one-year statutory limitation period in s. 148 of the Insurance Act, R.S.O. 1990, c. I8. Co-Operators relied on the contractual provisions in the policy incorporating the one-year limitation set out in the Insurance Act. The motion judge held that the provision in the policy limiting coverage to claims made within one year of the loss did not override the statutory two-year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24 lacked specificity to override the statutory limitation period and that in any event, the contract of insurance was not a “business agreement” as required under s. 22(5) of the Limitations Act, 2002.
The Court of Appeal per Doherty, Cronk and Lauwers JJ.A., allowed the appeal and held that the contract of insurance not only provided for a one-year limitation period in clear and unambiguous language, it overrode the two-year limitation period in the Limitations Act, 2002. Specifically, s. 22(5) of the Limitations Act, 2002 allows parties to vary or exclude, by agreement, the otherwise applicable statutory limitation period; albeit it only applies only to “business agreements” as defined in s. 22(6).
The Court of Appeal held:
 We cannot accept that an agreement purporting to vary the statutory limitation period is enforceable under s. 22 of theLimitations Act, 2002 only if it contains the specific requirements set out by the motion judge. Nothing in the language of s. 22 offers any support for imposing these requirements. The only limitation in s. 22(5) is found in the definition of “business agreement”. No other limitation appears, expressly or by implication, and certainly no content related requirements appear in s. 22(5).
 A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in “clear language” describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods. A term in a contract which meets those requirements will be sufficient for s. 22 purposes, assuming, of course, it meets any of the other requirements specifically identified in s. 22.
With respect to the issue of whether a contract of insurance is a “business agreement”, the Court of Appeal concludes:
 As outlined above, “business agreement” is defined in s. 22(6) as an agreement made by parties, none of whom is a consumer as defined in the Consumer Protection Act, 2002, S.O. 2002, C.30. That Act defines “consumer” as:
“Consumer” means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.
 By using the definition of “consumer” as found in the Consumer Protection Act, 2002, the legislature drew a bright line for the purposes of s. 22(5) between agreements entered into for “personal, family or household purposes” and other agreements. Subject to the potential application of the other parts of s. 22, persons entering into agreements for personal, family or household purposes cannot contract out of the limitation periods in the Limitations Act, 2002. Persons contracting for other purposes can do so.
 The respondents contracted with Co-Operators for insurance covering various risks related to the operation of their business. The contract was not “for personal, family or household purposes”. The contract fell within the definition of “business agreement” in s. 22(6) of the Limitations Act, 2002.
Arguably, contracts of insurance are not fairly characterized as business agreements. There is no equality of bargaining power between an insured and the insurer. There is no negotiation of the wording of the insurance policy: the statutory conditions, declarations and exclusions are carved in stone. There are riders and endorsements that allow for some flexibility in scope of coverage, but it is difficult to reconcile the Court of Appeal’s reasoning with principles of contract interpretation.
That said, the Court of Appeal for Ontario has spoken. Unless the plaintiffs successfully seek eave to appeal to the Supreme Court of Canada, don’t blithely assume that the general 2-year limitation period applies to your client’s business insurance loss claims, unless you relish having to report yourself to LawPro for an E&O claim.
Read the client’s insurance policy carefully and determine the applicable limitation period. One can safely assume that all the major insurance companies either have before incorporated the one-year statutory limitation period under s.148 of the Insurance Act, or will do so following this decision.
*H/T to David Himelfarb, Head of the Litigation Practice Group at my firm, Himelfarb Proszanski LLP for alerting me to this decision.