CANADA Law and Practice Contributed by: Chris McKibbin, Avi Sharabi, Alex Valova and Douglas Treilhard, Stieber Berlach LLP
Stieber Berlach LLP 130 Adelaide Street West Suite 3200 Toronto, Ontario Canada M5H 3P5
Tel: 416 366 1400 Fax: 416 366 1466 Email: info@sblegal.ca Web: www.sblegal.ca
1. Key Drivers and Resolution of Insurance Disputes
One observable trend is away from pandemic-related business interruption disputes toward an increase in disputes about cyber incidents and privacy breaches. Although the body of reported jurisprudence remains smaller than in more established property and liability lines, it has expanded noticeably in recent years as cyber risks have become more prevalent. 1.2 Role of Policy Wording and Drafting Policy wording is the single most important driver of insurance coverage litigation. In Canada, only a few types of coverages feature legislatively mandated wording, providing insurers with wide latitude in cre- ating wordings to match their risk appetite. Insurance disputes are fundamentally exercises in contractual interpretation and many recent cases have turned on a few words in an exclusion, endorsement, definition or reporting provision rather than on disputes about the underlying facts. Recurring areas of dispute include: • interaction between coverage grants and exclusion clauses; • interaction between endorsements and standard- form policies; • the meaning of “physical loss” or “physical dam- age” in property and business interruption poli- cies.; and • the “your work” exclusion in construction defect claims.
1.1 Common Triggers of Insurance Disputes The most frequent insurance disputes in Canada con- tinue to arise from coverage interpretation, particularly in the following areas. • Commercial property and business interruption insurance. The litigation generated by the COV- ID-19 pandemic produced numerous disputes over the meaning of “direct physical loss” or “physical damage” and the extent to which business inter- ruption coverage responds to government-mandat- ed shutdowns or loss of use of property. • The insurer’s duty to defend. Canadian courts regularly confront questions concerning whether pleadings disclose the mere possibility of cov- erage; whether exclusions clearly remove that possibility; and how defence obligations should be allocated among successive or concurrent insur- ers. • Property insurance. This includes valuation issues; proof-of-loss requirements; replacement-cost cov- erage; actual cash value; by-law compliance costs; vacancy or change-of-risk issues; and disputes regarding rebuilding obligations following cata- strophic losses. • Cyber, privacy and technology-related losses. Reported cases have considered the application of cyber-related exclusions, the characterisation of privacy and data breach claims and insurers’ defence obligations in class actions arising from cyber incidents.
43 I NSURANCE L I T IGATI O N 2026
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