A vague extension offer can extend an insurance contract without premiums
Plaintiff Insurance Broker sought a Declaration that it was not liable to pay the Defendants, an insurance company and an insurance broker, premiums for an extension of insurance coverage. The Plaintiff also sought $100,000 in general damages for intentional interference with its economic relations and $50,000 in special damages. Application allowed in part.
M.B. Kouri Insurance Brokers Ltd. v. R.L. Gougeon Ltd.,  O.J. No. 1141, Ontario Superior Court of Justice, February 27, 2009, D.J. Power J.
The issues in the case were largely factual. The main issue was whether the Defendant Insurance Company (the “Insurer”) gave any commitment to renew coverage. The Insurer was aware that continued coverage would be a priority concern for the Plaintiff Insurance Broker and its clientele. The Insurer eventually offered a 30-day extension of insurance coverage but there was nothing in the communication to indicate that the Insurer would be seeking a premium for the extension. The Plaintiff interpreted this to mean that the Insurer would be providing a 30-day extension at its own cost due to its delay in renewing coverage.
The Court, allowing the action in part, found that the Insurer’s conduct was such that it lead the Plaintiff to believe that the premium for the extension would be waived. However, the Plaintiff’s claim for loss of business against the Insurance Company was dismissed as being too speculative. Similarily, the claims for damages against the Defendant Insurance Broker were dismissed.
This case was originally summarized by Cameron B. Elder and originally edited by David W. Pilley.
To stay current with the new case law and emerging legal issues in this area, subscribe here.