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Insurance - Binder. SIR Corp. v. Aviva Insurance Company of Canada
In SIR Corp. v. Aviva Insurance Company of Canada (Ont CA, 2023) the Court of Appeal considers a business insurance policy that the insured claimed was triggered by provincial EMCPA COVID orders.
In these quotes the court considers a insurance 'binder' letter, and it's relation to the subsequent policy:(1) Binder
[7] In 2017, SIR’s former insurer announced that it was exiting the Canadian property market. SIR’s insurance broker invited Aviva to provide a quote on a commercial property policy for SIR.
[8] In September of 2017, SIR’s insurance broker prepared the Binder for Aviva’s signature. In October of 2017, Aviva returned the signed Binder. The Binder states that it is evidence that the insurance described in it has been placed with Aviva, subject to the terms, conditions, exclusions, and provisions contained in the policy to be issued and any endorsements attached thereto. By its terms, the Binder was effective until it was subsequently replaced by delivery of Aviva’s written contract.
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(2) Extricable legal error: misidentification of the scope of the Policy
[36] I agree with SIR that the application judge committed an extricable legal error by treating the Binder as forming part of the Policy. The Binder was prepared by SIR’s insurance broker in 2017, was not attached to the Policy, and, by its terms, was effective only until replaced by delivery of Aviva’s written contract.
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[54] The Binder was prepared by SIR’s insurance broker, who acted as SIR’s agent and negotiated the policy that replaced the Binder. While not part of the Policy, the Binder is clearly part of the factual matrix: Lloyds Syndicate 1221 (Millennium Syndicate) v. Coventree Inc., 2012 ONCA 341, 291 O.A.C. 178, at para. 29, leave to appeal refused, [2012] S.C.C.A. No. 276. Indeed, in its supplementary factum below, SIR relied on the Binder as forming part of the factual matrix and setting out a summary of the terms of the Policy. Significantly, the language used in clause 1 of Section II is virtually identical to the language in the Binder describing “Perils Insured” as “All Risks of Direct Physical Loss or Damage (except as excluded)”.
[55] Contrary to SIR’s submission, relying on the Binder to interpret the coverage afforded under the Policy is not contrary to s. 124(1) of the Insurance Act, R.S.O. 1990, c. I.8. That section provides:124(1) All the terms and conditions of the contract of insurance shall be set out in full in the policy or by writing securely attached to it when issued, and, unless so set out, no term of the contract or condition, stipulation, warranty or proviso modifying or impairing its effect is valid or admissible in evidence to the prejudice of the insured or beneficiary. [56] The purpose of s. 124 is to protect an insured from unilateral changes to an insurance policy: Sagl v. Chubb Insurance Company of Canada, 2009 ONCA 388, 249 O.A.C. 234, at para. 68, leave to appeal refused, [2009] S.C.C.A. No. 303. Here, I consider the Binder to interpret the Policy, not to modify or impair its effect. As Sattva instructs, the factual matrix is to be “used as an interpretive aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words”: at para. 60.
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