This is an appeal by an insurer from a judgment in a Special Case. The trial judge declared that Part 3 of the Insurance Act prohibits provisions regarding a limitation period in a group life insurance and long-term disability policy, and allowed the Plaintiff’s claim for long-term disability benefits brought outside the limitation in the policy. The Appeal court reversed, holding that the contract was for life insurance and was bound by the appropriate statutory limitation period and therefore the claim was statute barred.

Gumpp v. Co-operators Life Insurance Co., [2004] B.C.J. No. 742, British Columbia Court of Appeal

The Plaintiff was insured for life insurance and long-term disability benefits under a group policy with the Appellant Co-operators. On December 28, 1994, she claimed disability benefits under the policy on the basis that she suffered from a permanent form of depression. Co-operators accepted the claim and paid benefits until November 30, 1998, when benefits were terminated on the basis that the Plaintiff was not totally disabled from all occupations. An internal review was denied on the basis that no new medical evidence supported a claim for total disability. The internal review decision was communicated to the Plaintiff on October 20, 1999, and the Plaintiff commenced an action on May 24, 2001.

The policy contained a limitation period that no action shall be brought unless it is brought within one year of the date upon which the insurance company terminates the payment of benefits. A further term of the policy stated that any limitation period in the policy is extended to agree with the minimum period permitted by law in the jurisdiction of the employee’s residence. The BC Insurance Act sets out different limitation periods depending upon the type of insurance policy under which benefits are paid. Group and individual policy for “sickness insurance” are governed by Parts 1 and 4, while group or individual policies that provided “disability insurance” are bound by the one year limitation period contained in Part 3 for life insurance.

The Appeal Court accepted Co-operators’ position that the Plaintiff’s policy was “disability insurance” because it was part of a life insurance contract, but the provision of the Act which set out the limitation period for life insurance was contingent upon death as the triggering event. Madam Justice Southin pointed out that this led to a ridiculous situation because the draftsman who fashioned the words grafting onto Part 3 of the Insurance Act adding “disability insurance” did not amend the wording of the section. The court went on to hold that therefore a disability claim with no “death” is not caught by the section, and therefore the limitation period in the policy reflected the intentions of the parties and was therefore binding. Otherwise the claim would have been caught by the one year statutory limitation.

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