A definition of Subrogation from a paper on the website of one of our Canadian Law firm members, Whitelaw Twining, is “A doctrine by which one who has indemnified another for a loss suffered at the hands of a third party may pursue that third party for the amount of the indemnity….Subrogation is most commonly a vehicle through which insurers recover amounts paid to their insureds and place the responsibility for the loss with those that caused it.”
No matter how familiar you are with subrogation laws and rights in the U.S., if you are filing a claim in Canada or trying to collect on a claim via subrogation, you may be dismayed by what you don’t know about both insurance and subrogation laws in the various provinces in Canada. For example, NL Member John Vamplew, Director of Whitelaw Twining, B.C., told us after reading this blog, “I am not able to comment on the accuracy of the portion relating to Quebec because Quebec has a different legal system than the rest of Canada” This blog is not meant to be legal advice, but only to make you aware of some of the differences in the laws between the U.S. and Canada and even between Quebec and the other Canadian Provinces. Perhaps you will also see a necessity to forward such claims to local Canadian counsel. Call NL or search on our website for a referral.
An excellent place to start pointing out differences in the law is with an article in the Subrogation & Recovery Law Blog titled “Canadian law still requires that subrogated actions be brought in the name of the insured rather than the insurer.” We quote briefly from that article: “In Canada, the right of subrogation is a product of the common law, although it may be modified by statute or contract. Unlike in the United States, Canadian common law provides that an insurer may sue only in the name of the insured in relation to a subrogated claim .That rationale has its roots in the need to provide a process by which the insurer would be able to exercise its subrogated rights….The right of an insurer to bring a subrogated action is derivative; that is, [it is] merely a right to make such claim for damages as the insured himself could have made.”
Another source, Canadian-Lawyers.ca, provides information on Legal Issues by practice and location, enabling you to compare laws in the various Canadian Provinces. On that website, a search on Subrogation Laws yielded an interesting article titled “Quebec Subrogation Claims,” by Luis Millan for The Lawyers Weekly. He opens with “Many in the Quebec legal community risk facing an unwelcome surprise when settling personal injury claims thanks to a series of little-known dispositions that grant the provincial government the power to recover indemnities from tortfeasors. The Quebec Health Insurance Board (RAMQ) is the main culprit, but other provincial bodies such as the province’s workers’ compensation board and the automobile insurance corporation can – and do – assert their right to subrogation claims against persons responsible for bodily injuries….Another sticky point is that while RAMQ usually seeks recovery for medical and hospital expenses that it already incurred, it has in the past sought and demanded payment to cover expenses for future treatment in cases where the injuries were severe.” Read the entire article here.
Automobile Accident Claims in British Columbia: A manual for U.S. Claims Examiners is a 20-page document covering claims issues that involve situations such as a U.S. driver crossing the border in British Columbia, liability when renting a car, borrowing a friend’s car, etc. One example is, “Subrogation rights between IBC and out-of-province insurers has always been a source of litigation in the auto insurance industry….In B.C., it has been accepted by the courts that, pursuant to section 25 of the Insurance (Motor Vehicle) Act, an out-of-province insurer may not recover accident benefits it has paid through the courts in British Columbia. Courts have found that an insurer can have no greater rights than the person who obtained those benefits and has released the claim to the extent of those benefits…. the Supreme Court of Canada has now confirmed that an out-of-province insurer cannot even recover from ICBC accident benefits it has paid through its own courts because a province can have no legislative competence to legislate extraterritorially, and provincial laws cannot apply to matters not sufficiently connected to the enacting province.”
Practical and Substantive Aspects of Subrogation, a paper written by: Eric Dolden of Dolden Wallace Folick LLP, refers to a U.S. study he uses to show that there is rather modest recovery in subrogation cases that are “attributable to the following factors:
(a) A clear lack of judicial enthusiasm for ‘loss shifting’ exercises by insurers, which has led to the development of a wide variety of ‘judge made’ limitations on subrogation rights;
(b) Procedural impediments, mainly established by the various general insurance statutes of the common law provinces of Canada, i.e., the Provincial Insurance Acts, which limit the ability of an insurer to commence subrogated lawsuits without regard for the wishes or interests of the insured; and
(c) The creation by the insurance industry itself of a wide variety of self-imposed contractual limits on rights of subrogation, which to a significant extent eliminate the potential for subrogated claims in several key sectors of the economy, such as the construction industry.” The author also refers to other prohibitions on subrogation that are worth looking into.
Another informative source of information and examples of subrogation claims in Canada can be found in the archives of Canadian Underwriter Magazine by searching on Subrogation Law. In addition to the 3-page list of articles, the reader can conduct an Advanced Search by words, phrases, topics and categories.
We encourage you to refer to the paper quoted from in the first paragraph, SUBROGATION: BASIC PRINCIPLES, EMERGING TRENDS AND PRACTICAL CONSIDERATIONS, Prepared by John M. Moshonas, John A. Vamplew and Sean R. Lerner of Whitelaw Twining Law Corporation, Vancouver, B.C. Attached to this paper as Appendix A is a sample subrogation agreement between an insurer and an insured homeowner seeking to recover their losses from a fire at the insured’s home. “The agreement illustrates the types of provisions that can be found in a [Canadian] subrogation agreement, depending on the particular circumstances between the insurer and the insured….Subrogation agreements are themselves a modification of the [Canadian] common law principles of subrogation. The parties are agreeing to participate in an inherently uncertain process – litigation.”
The above resources are just “the tip of the iceberg” for online resources regarding Canadian Subrogation Laws and Rights. Again, we remind you that this blog is not meant to be legal advice, only to make you aware of some of the differences and perhaps the necessity of forwarding a claim to local Canadian counsel. Call NL or search on our website for a relevant referral.
We thank NL member John Vamplew of Whitelaw Twining for consulting with us on this article.
Marti Lythgoe, Editor, The National List of Attorneys