Schroeder v. Co-operators General Insurance Company, 2024 ONCA 54 (CanLII)

Full Decision

In Schroeder v. Co-operators General Insurance Company, the Ontario Court of Appeal reaffirms that the limitation clock for underinsurance claims does not start to run until a demand for indemnification is made and goes unsatisfied.

The plaintiff in this case was injured in a motor vehicle collision in Washington state. The defendant driver who caused the collision was insured with Progressive. The policy limits were only $25,000. The plaintiff had her own auto policy with Coseco. The Coseco policy had the standard underinsured coverage.

Progressive, on behalf of the defendant driver, offered to settle the plaintiff’s claim for the full policy limits of $25,000.

Between June 2015 and March 2016, plaintiff’s counsel reached out to Coseco three times seeking Coseco’s consent to accept the $25,000 offer and advising of the plaintiff’s intention to proceed with an underinsurance claim against Coseco.

On April 15, 2016, Coseco sent an email acknowledging that the plaintiff would be accepting the $25,000 offer from Progressive.

Then, according to Coseco, in December 2016 it left 2 voice mail messages for plaintiff’s counsel. In the first message Coseco asked for documents related to the underinsured claim. In the second message, Coseco asked about the status of the underinsurance claim and whether there was an intention to bring one, and also advised of the limitation period.

On February 13, 2019, plaintiff’s counsel sent Coseco a request for indemnification under the underinsurance auto policy. The letter included an offer to settle for almost $2 million plus special damages and costs.

On February 10, 2020, after attempts to settle the underinsurance claim failed, plaintiff’s counsel issued a statement of claim.

Coseco brought a summary judgment motion arguing the claim was out of time under the Limitations Act. Coseco argued that the plaintiff made a demand for indemnification on or before April 15, 2016 and the claim was issued more than two years thereafter. The motion Judge disagreed.

The motion Judge held that according to Schmitz v. Lombard General Insurance Company of Canada, an underinsurance claim is a demand obligation. There is no loss until the insurer fails to satisfy a demand for indemnification. The loss exists the day after the demand is made (if it is still unsatisfied). The court held that the plaintiff first demanded indemnification on February 13, 2019. The limitation clock started to run the next day on February 14, 2019. The claim was issued within two years of that date. There was no demand before February 13, 2019, because no money had been requested before then – and no response was required.

Coseco appealed. The Ontario Court of Appeal upheld the motion decision. The motion Judge properly applied Schmitz v. Lombard.

Written by

James Page is a lawyer at Martin & Hillyer Associates who has been practicing personal injury and civil litigation since 2010.
James is a board member of the Ontario Trial Lawyers Association (OTLA) and the Halton County Law Association (HCLA), and a Past President of the Brain Injury Association of Peel & Halton (BIAPH).