Case Comment -- Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 -- Thumbs Up

Traditional insurance policies covered liability arising out of "occurrences" during the policy period. As liabilities reach further and further into the past, as liabilities for institutional sexual abuse certainly do, a market has arisen for a claims-made approach, in which the coverage kicks in if there is a claim during the policy period. There is much case law about when the liability occurred, but the new form of insurance requires some court guidance about when claims occur. Is it when a formal demand from a lawyer appears on the institution's door, or is it when the claim is known to be "out there."

In Jesuit Fathers, the Supreme Court of Canada has confirmed that the common law rules for when a "claim" occurs between insured and insurer (i.e., when a communication arises from or on behalf of the claimant stating an intention to hold the recipient responsible for the claim) also apply to when a claim occurs in a claims-made coverage contract. The Jesuit Fathers let their insurance policy lapse after becoming aware (through internal investigations) of the possibility of sexual abuse claims, but before these claims were communicated by lawyers for the plaintiffs. The Court held that the claims did not occur until they were formally communicated.

This case will likely be used by insurance company lawyers' in broader contexts. While it recognizes that in insurance law coverages will be read broadly, and exclusions narrowly, it also asserts that in the end, it is the text of the policy that governs.

This was a sensible decision, since it creates clear rules about when key events happen (always good). The message to institutions is to make sure to renew claims-made insurance.