One-year contractual limitation period was enforceable by insurer against insured in respect to coverage dispute.
Boyce v. Co-operators General Insurance Co.,  O.J. No. 2568, May 8, 2013, Ontario Court of Appeal, D.H. Doherty, E.A. Cronk and P.D. Lauwers JJ.A.
This was an appeal of a motion judge’s decision that a one-year limitation period set out in an insurance policy did not override the statutory two-year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c.24. The motion judge held that the term in the policy lacked the specific language necessary 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 decision involved the denial of insurance to a women’s fashion boutique in respect to clean-up costs and loss of inventory arising from a foul smell emanating from the entrance area to the store. The insured claimed that its business had been vandalized, a peril covered by the policy. The insurer took the position that the smell had been caused by a skunk and that the damage was not covered by the policy. The insured filed a proof of loss claim in December 2010 and commenced its action in February 2012, more than one year, but less than two years after the incident. The insurer moved for summary judgment, claiming that the action was time barred by a contractual one-year limitation period.
The Court of Appeal allowed the appeal finding that the contract of insurance provided for a one-year limitation period, and that it is possible to vary a statutory limitation period by contract provided the policy of insurance is a “business agreement” as defined in the Act. The court held that the policy of insurance was a business agreement and therefore the one-year limitation period in the policy was enforceable.
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