The Ontario Superior Court recently rendered a decision dismissing a claim brought against insurance companies in the wake of a water damage incident at a restaurant. The incident, involving a burst water pipe in a sprinkler system, caused substantial harm to the establishment’s property and contents.
The case, identified as Aviva Insurance et al v. Sahara Restaurant, 2024 ONSC 1415, centered on Sahara Restaurant, the respondent, whose property suffered damages due to the aforementioned incident. Following the occurrence, Sahara Restaurant promptly notified its insurers, including Aviva Insurance Company of Canada, Lloyd’s Underwriters, and Chubb Insurance Company of Canada. Nevertheless, the insurers sought a declaration from the court, arguing that Sahara Restaurant had exceeded the limitation period for pursuing a claim under its hospitality insurance policy, which, according to the insurers, expired on January 1, 2019. Although Sahara Restaurant had notified the insurers promptly, it failed to file a Statement of Claim before the expiration of the limitation period, as contended by the insurers.
The Ontario Superior Court concurred with the insurers, underscoring the definitive nature of the one-year limitation period outlined in both the insurance policy and the Insurance Act. Despite Sahara Restaurant’s assertions that ongoing discussions and a demand for appraisal with the insurers should have extended or suspended the limitation period, the court ruled that these actions did not alter the original timeframe.
Furthermore, the court addressed Sahara Restaurant’s claims of promissory estoppel and allegations of bad faith against the insurers, finding insufficient evidence to substantiate these assertions. It determined that communications between Sahara’s broker and the insurers constituted routine dealings and did not imply an extension of the limitation period.
Consequently, the court dismissed Sahara Restaurant’s application to compel the insurers to participate in an appraisal of losses, emphasizing the importance of adhering to contractual limitation periods within insurance policies and clarifying that an appraisal demand does not pause or extend these periods.
