The limitation period in a disability action commences on the date that benefits are terminated, not on the date that the insured is advised that benefits will be terminated

The limitation period in a disability action commences on the date that benefits are terminated, not on the date that the insured is advised that benefits will be terminated.  The insured was successful in bringing an application to strike a limitation defence in these circumstances.  The Court applied Balzer v. Sun Life Assurance Company of Canada, 2003 BCCA 306.

Lanki v. Co-Operators Life Insurance Co., [2007] B.C.J. No. 2787, British Columbia Supreme Court, Bennett J., November 7, 2007

The Plaintiff was covered by a group policy of insurance with the Trustees of the Office and Professional Employees International Union Local 378 Ltd. Trust. The policy provided long-term disability coverage to eligible employees. The Plaintiff became disabled from performing the usual and customary duties of her own occupation on July 8, 2003. She received sick benefits from her employer from that date until October 21, 2003. On October 21, 2003, Co-Operators Life Insurance Co. began paying benefits to the Plaintiff under the terms of the policy. She was eligible for own occupation benefits until October 18, 2005. By letter dated July 27, 2005, Co-Operators advised that as a result of a report from an independent medical examination, the Plaintiff would not receive benefits beyond October 18, 2005.

The Plaintiff sent Co-Operators additional information, and on August 23, 2005 Co-Operators wrote to the Plaintiff and advised her that they had received the additional medical information. The letter also stated that she would receive benefits until October 18, 2005 and then her file would be closed.

The parties agreed that s. 22 of the Insurance Act governed the litigation. The Court applied the decision of Balzer v. Sun Life Assurance Company of Canada, 2003 BCCA 306 and found that the limitation period ran from the date of the termination of the benefits, not the notice of the termination of the benefits. Accordingly, the limitation defence was struck and the Plaintiff could bring her action on the merits.

This case was originally summarized by Sarah Swan and edited by David W. Pilley.

To stay current with the new case law and emerging legal issues in this area, subscribe here.