Nebozuk v Northbridge General Insurance Company, 2025 ABKB 197 is a recent interesting case pertaining to limitation periods for claims made under SEF 44 Family Protection Endorsements (“SEF 44 Endorsements”). SEF 44 Endorsements are a feature of most auto insurance policies that allow an injured plaintiff to sue their own insurance company for the difference between what they can recover from a tortfeasor and what they are actually owed, if a difference exists between the tortfeasor’s policy and their own. For example, if a defendant driver with policy limits of $200,000 injures a plaintiff, but the plaintiff’s damages are worth $300,000, then the plaintiff can sue their own insurer for the $100,000 difference (provided their own policy limit is greater than $200,000, and after they recover the $200,00 from the tortfeasor).
In Nebozuk, the Plaintiff filed a statement of claim against his insurer under the SEF 44 Endorsement on December 20, 2018. He was seeking damages that exceeded his available recovery from the tortfeasor in a motor vehicle accident (the “Accident”). His insurer applied for summary dismissal, which an Applications Judge dismissed. The insurer then appealed.
The Accident occurred on July 31, 1998. The Plaintiff’s counsel was not informed until December 22, 2016 that the tortfeasor’s policy limit was $200,000. The Plaintiff filed a Discontinuance of Claim on October 31, 2017 and settled the claim for $250,000 (the policy limits plus interest, costs, and disbursements).
The Applications Judge found the limitation period began on October 31, 2017, and that this date of settlement was the day the Plaintiff knew or ought to have known that his claim was over the policy limits of $200,000. The Applications Judge also found the limitation period was 2 years.
Issues / Holding
On appeal, the Court of King’s Bench confirmed the Applications Judge’s analysis. They had to decide two issues: (1) When did the limitation period start? And (2) what is the limitation period for suing under the SEF 44 Endorsement?
Analysis
Section 6(c) of a standard SEF 44 Endorsement reads as follows:
Every action or proceeding against the insurer for recovery under this endorsement shall be commenced within 12 months from the date upon which the eligible claimant or his legal representative knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction which the accident occurred. No action which is commenced within 2 years of the date of the accident shall be barred by this provision.
However, Section 7(2) of the Limitations Act states:
An agreement that purports to provide for the reduction of a limitation period provided by this Act is not valid.
The Court confirmed that the rule articulated in Shoemaker v Wawanesa Mutual Insurance Co., 1993 CanLII 7048 (AB KB) remains good law, in that section 6(c) of the SEF 44 Endorsement is ambiguous, and therefore the interpretation favourable to the insured must be given. The usual rule applied is that the limitation period starts to run at the time of a final judgment or settlement, barring cases where there is no doubt the claim exceeds the available policy limits. This was not a case where the quantum of the Plaintiff’s claim was clear and obvious. Accordingly, the limitation period began when the Plaintiff discontinued their claim on October 31, 2017.
Turning to the issue of the limitation period’s length, the court heavily relied on Shaver v Co-operators General Insurance Company, 2011 ABCA 367. In Shaver, the Court of Appeal ruled that the contractual limitation period contained in the SEF 44 Endorsement (of 12 months) only begins on discovery (such as when plaintiff learns of inadequate insurance, of total claims exceeding minimum insurance limits, or both). Regardless, the Court found that the SEF 44 Endorsement’s 12-month limitation period is invalidated by section 7(2) of the Limitations Act, and that the applicable limitation period for a claim brought against an SEF 44 insurer is 2 years.
Conclusion
This case serves as a caution for insurers intending to rely on limitation period defences. Unless there is no doubt that a plaintiff’s claim will exceed the available funds from the tortfeasor, the limitation period will not begin to tick until settlement or judgment. Even then, the insured has 2 years, (not only 1 year) to bring a claim against their SEF 44 insurer.
