Insurance policy terms must be in writing

There is no general rule of law that contracts must be in writing, but certain types of contracts (e.g. contracts for the sale of land) are governed by statutory provisions which do require the contracts to be in writing, and indeed that is the case for insurance contracts in British Columbia.

 

Section 16 of the Insurance Act, RSBC 2012, c. 1 provides that contractual provisions are only binding on an insured if they are set out in writing:

 

(1) Each term and condition of a contract must be set out in full in the policy or in writing securely attached to it when it is issued and, unless so set out, is not valid or admissible in evidence to the prejudice of the insured or a person to whom insurance money is payable under the contract.

(2) This section does not apply to an alteration of the contract agreed on in writing between the insurer and the insured after the issue of the policy.

(3) If a contract, whether or not it provides for its renewal, is renewed by renewal receipt, it is sufficient compliance with subsection (1) if the terms and conditions of the contract were set out as required by that subsection and the renewal receipt identifies the contract by its number or date.

(Insurance Act, RSBC 2012, c. 1, s. 16).

 

In Okanagan Mainline Real Estate Board v. Canadian Indemnity Company and Whillis-Harding Insurance Agencies Ltd. (1969), 71 W.W.R. 669 (B.C.C.A.), aff'd. 1970 CanLII 152 (SCC), [1971] S.C.R. 493, and in Zanatta Installations Ltd. v. Elite Insurance Co. (1994), 21 C.C.L.I. (2d) 161 (B.C.C.A.), the insurers tried to rely on terms contained in documents separate from those provided to the insureds. In each case, the Court held that the documents were supposed to be part of the policy, but since they had not been received by the insured the insurer was not permitted to rely on them.

 

However, if the insured receives the policy declarations page that indicates that there are additional terms then the insured may be bound by those terms. In Hwang v. AXA Pacific Insurance Co., 2001 BCCA 410 the trial judge accepted that the insured received the “Declarations” page each year (para. 14), but found that the insured did not receive the policy wording booklet (para. 25). The court held that the insured should have asked for a copy of the policy booklet:

 

A reasonable person, upon reading the documents which came from the agent to the respondent Hwang, would grasp immediately that there was another document embodying the policy wordings of which he ought to have a copy and if he had not received it, he would ask for it.

(Hwang v. AXA Pacific Insurance Co., 2001 BCCA 410 at para. 30).

 

Further, the court held that a reference to the document containing the policy wording was sufficient to put the insured on notice of the policy wording:

 

[T]the provisions of s. 12 [s. 16 in the current legislation] may be satisfied by reference in the document received by the insured to another document containing the terms and conditions of the policy. This meets the requirement of the section that the terms and conditions are set out in the policy, when issued, and distinguishes those terms from terms that may be added, when "agreed on in writing between the insurer and the insured after the issue of the policy", as provided in s. 12(2).

 

Physical delivery to the insured is not required. If it were, I would expect that the Legislature would have so provided, as it has in ss. 14 and 38 of the Act.

 

(Hwang v. AXA Pacific Insurance Co., 2001 BCCA 410 at para. 67 - 68).

 

The court also noted that an insured will not necessarily be held to a lower standard because they do not speak English as a first language:

 

[T]he law must assume, if business is to be carried on, that those who do not understand the documents relating to their own affairs will have those documents translated for them.

(Hwang v. AXA Pacific Insurance Co., 2001 BCCA 410 at para. 14).