CANADA Law and Practice Contributed by: Chris McKibbin, Avi Sharabi, Alex Valova and Douglas Treilhard, Stieber Berlach LLP
its loss was covered under policy sections for third- party liability, data breach response and crisis man- agement and first-party coverage, which stipulated a CAD1.5 million limit. The Court held that, absent a clear limitation, an insured may choose a claim path that is “more advantageous to themselves.” Further, purchasing new laptops was a reasonable and neces- sary mitigation expense. “Silent cyber” claims have grown noticeably, in which an insured attempts to recover cyber losses under general liability coverage. Most CGL and similar poli- cies carry exclusions targeted toward cyber claims, as do many property policies with respect to first-party losses. 4.4 Aggregation and Limits of Liability Canadian courts will typically (but not always) apply the “triple-trigger” approach when interpreting the meaning of “occurrence” in the context of long-term or systemic exposure to substantially the same harm- ful conditions. Under the triple trigger approach, where damage is continuous and progressive, is caused by exposure to a harmful or defective substance and in some cases by further exposure to exacerbating con- ditions, then only manifests itself while the damage is progressing or after it has fully developed, the damage is deemed to occur from the first exposure to the date of discovery (or discoverability) of the extent of the damage, triggering all policies on risk between these two points in time. This approach avoids much inter- insurer litigation which would otherwise result from long-term or systemic damage or injuries. However, scope for argument remains around aggre- gating language. In one long-running action currently pending in Ontario, a global mining company seeks indemnity for environmental remediation expenses incurred in connection with operations at 26 mining sites around the world over almost two decades. One of the mining company’s primary insurers has sued all of the insured’s excess insurers, seeking an interpreta- tion of the respective degrees of responsibility among the numerous insurers. The primary insurer has taken the position that it has a CAD22 million policy limit, but expects the excess insurers to argue that the limit is CAD22 million for
each occurrence, in each year, at each site in Can- ada. The primary insurer anticipates that the excess insurers will contend that their excess policies are not reached until the primary insurer’s limits of CAD22 mil- lion in each of numerous occurrences are exhausted. Should the matter be litigated to disposition, the deci- sion will likely be very instructive on how the term “occurrence” is to be interpreted and applied. 4.5 Sanctions and Illegality Issues Illegality and public policy represent a narrow, but important, area of insurance coverage law. Courts will not enforce insurance contracts or claims if doing so allows a person to profit from their own intentional crime or undermines the law’s deterrent effect. However, both case law and statutory amendments have sought to protect the positions of beneficiaries who were entirely innocent of the criminal or inten- tional loss-causing act. For example, Ontario and several other provinces have amended their Insurance Acts to restrict the scope of intentional act and criminal act exclusions to insureds: • whose act or omission caused the loss or damage; • who abetted or colluded in the act or omission; or • who consented to the act or omission and knew or ought to have known that the act or omission would cause the loss or damage. As discussed in greater detail in 7.2 Sanctions and Payment Challenges , many insurance policies have exclusions for sanctions liability and sanctions regimes may restrict who may receive indemnity under a policy. 4.6 Late Payment and Claims Handling Practices Canadian courts apply a commonsense approach to allegations of lack of good faith in claims handling. Although plaintiffs frequently make boilerplate allega- tions, actual findings of bad faith in claims handling – and awards of punitive damages – remain uncom- mon. The standard of review for a punitive damages award (including one from a jury) is the rationality test, ie, whether the defendant’s misconduct was so outra-
49 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook