Insurer Granted Summary Judgment In Claim Not Made During Policy Period

An insurer was granted summary judgment striking a claim commenced by a judgment creditor of the insured as the claim had not been made during the policy period.

Sawyer v. Canadian Lawyers Insurance Assn., [2013] A.J. No. 1143, October 21, 2013, Alberta Court of Queen’s Bench, Master J.T. Prowse

The plaintiff was a defendant in a motor vehicle accident. Her lawyer in the motor vehicle accident failed to file a statement of defence and so default judgment in the motor vehicle accident was entered against the plaintiff. The plaintiff then commenced an action against her former lawyer for the default judgment against her. The plaintiff in turn received a default judgment against her former lawyer. The lawyer was insured under a professional liability policy with the defendant insurer in the action at hand.

As the plaintiff was a judgment creditor of the insured, she was entitled to bring a direct action against his insurer. The insurer was entitled to raise against the plaintiff any defences it could have asserted against its insured. The insurer argued there was no coverage as the policy provided coverage to the insured for claims made during the policy period and claims arising after the policy period, but only if it received notice during the policy period of the potential future claim. The plaintiff’s claim was not made during the policy period, nor was the insurer notified of the circumstances which may reasonably give rise to the future claim. The plaintiff sought relief from forfeiture.

The court summarized the important distinctions between occurrence based policy and claims made policies, and the distinction between a coverage clause and a reporting clause. It concluded that relief from forfeiture could not compel the insurer to cover a claim made after the policy period ended. The court also confirmed that relief from forfeiture cannot be granted to expand a coverage clause. The plaintiff’s claim against the insurer was dismissed.

This case was digested by Djuna M. Field and edited by David W. Pilley of Harper Grey LLP.

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