In order for an insurer to rely upon exclusions contained in a policy of insurance, the insured must be provided with the policy. Reference to the policy in renewal subscriptions may not be sufficient to provide the insured with notice of exclusion clauses contained in the policy.

Hazan v. ING Insurance Co. of Canada, [2006] O.J. No. 853 Ontario Superior Court of Justice

The Hazans had a homeowner’s policy (the “Policy”) with ING Insurance Co. of Canada (“ING”). They suffered a loss when a frozen water supply pipe burst causing water damage to their home. They made an application for benefits under the Policy. The application was denied by ING. They commenced an action for a declaration of entitlement to benefits under the Policy.

The Policy contained a clause that stated that a loss or damage which occurred as a result of freezing or flooding was not covered by the Policy unless arrangements were made for a competent person to enter the premises each day to ensure adequate heating, or the water pipes were drained and shut off, or the plumbing and heating systems were monitored by an alarm station 24 hours a day. The Hazans claimed that they had not received a copy of the Policy and therefore had no knowledge of the clause. ING says the policy booklet would have been mailed to the Hazens when the policy was issued.

ING brought an application for summary judgment dismissing the action based on the failure of the Hazans to take the necessary precautions as required by the clause. The motions judge determined that there was a credibility issue to be resolved – did the Hazans receive the policy book, which required a trial of the action. ING submitted in the alternative that even if the policy book was not received by the Hazans, they had notice of the exclusions in the Policy based on the fact that the Hazans were provided with renewal receipts which referred to the original policy and its reference number. ING argued that the wording of the policy was incorporated into the Policy by reference of the policy in the renewal receipts that were provided to the Hazans. Therefore the Hazans had constructive notice of the exclusion contained in the policy wording through the renewal notice. ING relied upon Hwang v. AXA Pacific Insurance Co. (2001), 91 B.C.L.R. (3d) 34 (B.C.C.A.) as authority for this proposition.

Carnwath J. noted that while the opinion of the British Columbia Court of Appeal was worthy of considerable deference, it was not binding on him. He further noted that when an insured takes no steps to deliver a copy of the policy to the insured, it seems illogical that the insured can rely on exclusions in the policy merely by referring to the document in subsequent communications to the insured. In addition, Carnwath J. noted that the decision of the B.C. Court of Appeal was subject to certain debate amongst other jurisdictions in Canada, including International Movie Conversions Ltd. v. ITT Hartford Canada (2002), 57 O.R. (3d) 652 (C.A.) and Janmohamed v. Co-operators General Insurance Co. (1997), 45 C.C.L.I. (2d) 262, (Alta. Q.B.). Carnwath J. determined that this matter deserved consideration only after a full evidentiary foundation was established at the trial of the action and refused to dismiss the matter onto summary application.

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