The Court of Appeal confirms trial judge's interpretation of insurance policy in finding that the insurer had properly dispensed insurance proceeds to the insured's mortgagee pursuant to its rights as the first loss payee.
Insurance law — Property insurance — Valuation of property — Good faith — Interpretation of policy; Duties and liabilities of insured; Practice — Appeal
Oraniewicz v. Intact Insurance Co., [2024] B.C.J. No. 894, British Columbia Court of Appeal, May 14, 2024, L. Marchand C.J.B.C., D.C. Harris and L.A. Fenlon JJ.A.
The insurer issued a policy of insurance to the insured who owned and operated a restaurant and hotel. That hotel was damaged by fire which caused loss to the building, equipment, contents, and a loss of profits. When the insurer issued the policy, the insured was indebted to two lenders which had registered a debenture against the business premises. Due to their financial interest in the business, the lenders were named as the first and second loss payees.
The central issue at trial was whether the first loss payee was entitled to receive insurance proceeds under the policy covering certain losses. The insured claimed the lender was inappropriately paid out and claimed those proceeds under the policy. Additionally, the insured claimed damages for breach of the insurer's duty of good faith regarding their handling of the claim.
The trial judge examined whether the insurer had acted in a way that delayed the final resolution of the insurance claim. Ultimately, the judge rejected the insured's contention that he was not provided with a proof of loss in a timely manner, did not explain his options with respect to repairing the building or taking actual cash value, and prolonged the process of settlement by invoking the dispute resolution process under the Insurance Act, R.S.B.C. 2012, c. 1. The trial judge also rejected the insured's complaints about the payout to the first loss payee. As a result, the judge concluded the insured had not established any of the claims made in the action and it was dismissed.
The insured appealed the decision. The Court of Appeal upheld the trial judge's finding that the insurer had not breached its duties to the insured and that the insurer had properly dispensed the insurance proceeds to the insured's mortgagee pursuant to its rights as the first loss payee.
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