Manitoba court green-lights election of appraisal and arbitration process seven years after loss date

Over the objections of Temple Insurance Company, the Court of Queen’s Bench of Manitoba has allowed a dispute around a builders’ risk property insurance policy to proceed to the appraisal process seven years after the initial loss date.
The Winnipeg Regional Health Authority, PCL Constructors Canada Inc. and Derksen Plumbing and Heating (1984) Ltd. brought a motion requiring the insurer to nominate an appraiser and proceed to arbitration in a coverage dispute arising from equipment damage that happened in a May 11, 2004 storm.
The plaintiffs claimed losses to certain equipment at the Health Sciences Centre in Winnipeg, including air-handling units, burn unit modules and operating room modules. Derken installed the equipment as part of its subcontract with PCL.
Although the claimed losses were related to the 2004 storm, the plaintiffs did not detect them until Apr. 17, 2006, according to the Manitoba court decision, Winnipeg Regioanl Health Authority et. al. v. Temple Insurance Company.
Temple said the plaintiffs are not entitled to coverage and contests the amount of damages claimed.
Section 23 of the insurance policy allows for an appraisal at the election of the insured (and only the insured) in the event that the parties are unable to agree on the loss or damage sustained by the insured.
Temple argued the right of an insured to elect under the policy’s arbitration clause or the provincial Insurance Act does not exist in perpetuity, and should be exercised within a reasonable time after the loss date.
But “the facts do not support any suggestion that the defendant [insurer] has been prejudiced by the plaintiffs invoking their rights under s. 23 at this stage of the litigation,” the court ruled. “Nor is there any substance to the allegation that the plaintiffs have delayed asserting their rights and have waived or are thereby estopped by their conduct because of the passage of time.”
In particular, the court noted the parties had agreed to hand off the issues to their adjusters in late 2009. Logically, any kind of informal agreement to try and settle matters – in this instance, through the parties’ adjusters – had to be pursued (and fail) before the plaintiffs felt compelled to pursue the appraisal process and arbitration, the court ruled.