Major changes to the British Columbia Insurance Act, R.S.B.C. 1996, c. 226 (the “Act”), are set to take effect in the near future. When the Act was created in 1925, it was designed to regulate insurance policies issued for specific types of risks or perils; however, modern day policies generally provide coverage for a multitude of risks, which results in a disconnect between the law and insurance policies. The B.C. Legislature has not comprehensively reviewed or substantively modified the Act since the 1960s. The Supreme Court of Canada took notice of this fact in KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, when it criticized the Act for its antiquated paradigms and principles that ineffectively address modern multi-risk insurance policies and consumer needs, and expressly called on the Legislature for reform:
The outmoded category-based Act contains rules based on the old classes of insurance. The newer comprehensive policies are difficult if not impossible to fit into the old categories. The result is continued uncertainty about what rules apply. Claims stall. Litigation ensues. Courts struggle with tortuous alternative interpretations. The rulings that have emerged have been likened to a “judicial lottery”…
It would be highly salutary for the Legislature to revisit these provisions and indicate its intent with respect to all-risks and multi-peril policies.
Prepared by John Moshonas, John Vamplew and former associate, Robert B. Lilly.