Coverage Issues

As with all insurance policies, the LPA contains exclusions. Therefore, it is inevitable that some claims reported to the MIABC will fall partially, or in some cases, entirely outside of the coverage available. However, even if coverage seems doubtful, the MIABC encourages the reporting of all claims in case a review of the claim reveals some aspect that does attract coverage.

Except in the most straightforward situations, the MIABC will not make coverage decisions on its own. Rather, we will refer the matter to outside legal counsel for a coverage opinion. Once this has been received, we will advise the member of the coverage position recommended by our coverage counsel.

What if the claim is not covered?

The MIABC will send written communication to the member advising of a coverage denial. In this case, it is recommended that the member seek independent legal advice. The Claims Examiner handling the file will be happy to field any questions from the member or from its municipal solicitor regarding the MIABC’s position. In some cases, we will refer the member’s municipal solicitor directly to our coverage counsel.

What if the claim is partially covered?

For partially covered claims, the MIABC will write to the member to recommend a proposal for moving forward. Often, this will involve a split of defence costs, with the MIABC and the member each paying a portion of the defence costs. In most cases, the cost-sharing proposal will be formalized into a Non-Waiver Agreement. The MIABC will provide a draft of the agreement, and the member is invited to review the draft with its municipal solicitor.

What is a Non-Waiver Agreement?

The primary purpose of a Non-Waiver Agreement is to confirm that part of the claim is not covered and that the MIABC is not waiving any of its rights under the policy by participating in the investigation or defence of the claim. The key elements of the Non-Waiver Agreement are to confirm:

  • What part of the claim is covered and what part is not.
  • What proportion of defense costs are to be paid by the member.
  • The MIABC retains control over the investigation and defense.
  • The MIABC shall not settle the excluded portion of the claim without the written consent of the member.
  • The MIABC is not confirming coverage by virtue of investigating or defending the claim.

What is a Reservation of Rights letter?

If there are concerns about coverage and the MIABC does not yet have enough information to take a position, the MIABC will investigate the matter while reserving its rights under the policy, either through a Non-Waiver Agreement (described above) or a Reservation of Rights letter. A Reservation of Rights letter simply indicates that the MIABC will continue to investigation and/or defend the claim on the agreement that information may come to light which confirms the claim is not covered. In such an instance the matter would be referred back to the member for handling.

What if the member does not agree with the MIABC’s coverage position?

In many cases, coverage issues can be resolved through discussion between the member and the MIABC, resulting in an agreement for moving forward that satisfies both parties. If a member is unsatisfied with a coverage position taken by the MIABC, it is encouraged to review the issue with its municipal solicitor. We welcome any new information or perspectives the member or its municipal solicitor may have that affects a determination of coverage. Any new information will be provided to the MIABC’s coverage counsel for further review and comment.

If the parties still do not ultimately reach an agreement, the Reciprocal Insurance Exchange Agreement sets out a mandatory dispute resolution process involving a neutral coverage evaluator. If that process is unsuccessful, the parties may proceed with arbitration.

Sherman Chow

Director of Claims