Stalemated settlement negotiations don’t suspend claims filing deadlines

Clocks on limitation periods continue to run on filing insurance claims even if protracted settlement negotiations are stalemated, Saskatchewan’s Court of Appeal ruled last week.

The court weighed in on a dispute in which a claimant refused to file documents the home insurer needed to handle the claim. Also, the landlord of a property damaged by fire refused to cash the insurer’s final settlement cheque because he disagreed with the carrier’s valuation of his property.

“Parties cannot simply engage in a never-ending debate for tactical reasons and then say that the limitation period did not start to run because the debate was ongoing,” the Saskatchewan Appeal Court ruled in Goertz v Co-operators General Insurance Company last week, siding with the insurer. “As the Supreme Court expressly recognized in Maracle v Travellers Indemnity Co. of Canada…merely engaging in settlement discussions, in and of itself, does not extend a limitation period.”

Background

Robin Goertz and GSL Developments Ltd. [GSL] own a number of Saskatoon properties, including a duplex at 58 and 60 Gray Avenue. Co‑operators General Insurance Company insured the property.

A fire broke out at the duplex on Sept. 21, 2014. Both parties agreed the fire was accidental and the property policy covered the loss. However, the two sides disputed how much was payable under the policy. Dissatisfied with the Co-operators’ valuation of the loss, Goertz issued a statement of claim against Co-operators and his brokerage on Jan. 17, 2020.

A lower court dismissed Goertz’s claim, agreeing with Co-operators that he didn’t file his claim within the two-year statute of limitations. Goertz appealed the finding at the Court of Appeal, but the Appeal Court dismissed his appeal.

“Even if it could be said that the limitation period was extended by virtue of the debate between the parties, in this case, that debate came to a clear and convincing end on Aug. 17, 2015, with the communication of the findings of the appraiser and the position of the insurer,” the Appeal Court ruled.

In other news: What claims adjusters earn in 2025

Details of the dispute

In making its decision, the Appeal Court noted Goertz had failed to file documents with his insurer that were needed to resolve the claim.

“Co-operators initially determined the cost to rebuild the property as being $225 per square foot,” the Appeal Court ruling states. “This meant [Goertz was] underinsured and therefore the co-insurance clause under the policy applied, resulting in a much lower payout than would otherwise have been the case, had [Goertz] been fully insured.”

The co-insurance clause meant the total loss, after applying the deductible, was assessed at $108,976.06. A cheque for the amount was mailed to [Goertz] on Nov.10, 2014, the court found.

Co-operators determined the lost rent was worth $7,051.60 and sent a cheque to Goertz for this amount on Jan. 16, 2015. The insurer’s accompanying letter alerted Goertz to the two‑year limitation period applicable to any action he might wish to bring.

Goertz disagreed with the valuation and the insurer’s finding that he was underinsured. Co-operators obtained a new appraisal finding the cost to rebuild the building was $195 per square foot instead of its initial determination of $225 per square foot.

However, the new appraisal meant the building would cost $431,880 to rebuild, meaning Goertz had to maintain insurance of $388,692, per the co-insurance clause in his policy. And so, the co-insurance clause in the policy still applied despite the new valuation.

“Proof of loss forms were provided to Mr. Goertz on Sept. 26, 2014, Jan. 16, 2015, and July 1, 2015, but he did not complete and return these forms,” the Saskatchewan Appeal Court decision notes. “Mr. Goertz was asked to provide documentation to Co-operators regarding any lost rent, damage to mechanical systems and appliances, damage to siding and any hoarding, heating or interim security costs he had incurred, but he did not provide this information either.”

Goertz also did not cash the insurer’s $108,976.06 cheque for settlement of the claim. Co-operators informed him the cheque had been staledated and re-issued the cheque, which he again did not cash.

“Rather than bring a claim by Aug. 17, 2017 [the end of the limitation period], Mr. Goertz continued to try and debate the amount payable with Co-operators,” the Appeal Court found. “Mr. Goertz takes the position that, given the ongoing discussions between himself and Co-operators, he was not in a position to know that, having regard to the nature of the injury, loss or damage, a proceeding would be the appropriate means to seek to remedy it…

“[Goertz asserts] it is not appropriate to bring a claim while negotiations are ongoing. This reflects a misunderstanding of the statutory language. The language of [the province’s Insurance Act] has nothing to do with an assessment of whether a claim will succeed or whether it might be settled; rather, the provision is concerned with the date when a claimant knew or ought to have known a proceeding was or is ‘legally appropriate.’”

The Co-operators made it clear to Goertz several times that it considered the file closed, the court observed. That included a phone call on Jan. 22, 2018, in which a Co-operators representative told Goertz it would be the final time they send him a cheque for $108,976.06.

“Robin, we have reached the bottom of this claim,” the Co-operators rep told Goertz in a transcript of the call entered as court evidence. “There is no more discussion to be had. I did email you a letter on January 23rd, 2017, indicating exactly what you’re asking for, and part of the letter that I issued says, ‘As none of this information has been received in the time period in which you can bring legal action against…we have closed your claim, and no further payments will be considered….’

“There’s no further communication to be had on this claim. The claim is closed. There’s no more money owing.”