The Products

AuthorDenis Boivin
One thread unites all participants in t he Canadian insurance indus-
try: the in surance contract. Whether one is an insur ance provider,
an in surance consumer, or an intermediary, there is no escaping the
contract. At any point in time, millions of Canadia ns are involved in
a contractual relationship w ith an insurer and millions benef‌it from
an insurance contract w ithout being privy to the agreement. The in-
surance contract is the source of all r ights, obligations, and principles
recognized in insurance law. With the exception of the contract for
the sale of goods, it is arguably the most common ty pe of agreement
found in the marketplace.
The insurance contract is also one of the most distinctive of legal
instruments. In this chapter, the key elements of this di stinctiveness
will be reviewed. Fir st, we will describe t he fundamental characteristics
of an insurance contract — the features that disting uish this instrument
from other commercial agreements. Second, we will describe the many
ways in which insurance contracts can be classif‌ied and the import-
ance of these classif‌ications from a regulatory point of view.
Insurance law is a bra nch of the law of contracts. Generally spea king,
the principles learned i n a f‌irst-year contracts course apply to insurance
contracts. However, classifyi ng an agreement as insurance engenders
many consequences. Some principles of law apply only to insurance
agreements, while others are ir relevant to this type of contract. Further-
more, insurance contracts are heavily regulated in compari son to agree-
ments pertain ing to other commercial ventures. Freedom of contract still
exists in the insurance industry, but it is strongly curtailed by reg ula-
tors and the courts. Hence, one must be able to recognize that a given
contract relates to insura nce.
A recent case before the Albert a Court of Appeal illustrates t he
importance of this deter mination. In Brick Protection Corp v Alberta
(Provincial Treasurer),1 a provincial treasurer wa s trying to collect over
$700,000 in taxes from a corporation on the theory that it was oper-
ating as an insurance company. The corporation in question, Brick
Protection Corp (Protection), was a sister company to the Canadian
furniture reta iler The Brick (Brick). During the period relevant to the
tax asse ssment, Protection provided extended warranties to Brick fur-
niture and appliance customers in Alberta. The warranties were sold
by Brick employees and were available exclusively to Brick customers.
According to the terms of the warranties, Protection promised to repa ir
or replace the items warrantied for a f‌ixed period of time in exchange for
a fee that was between 10 and 15 percent of the purchase price of the
goods. In the event that repairs or replacements were impossible, Brick
reserved the right to cancel warranties by ref unding the price paid for
them. Before the Court of Appeal, the tre asurer of Alberta arg ued that
Protection was carr ying on the business of insurance within t he mean-
ing of the Alberta Insurance Act2 and, as a result, the cor poration should
pay the same taxe s as insurance companies pay on the policies they sel l
within the Province.
The ramif‌ications of Brick Protection could have been far-reaching.
For starters, if Protection were an insurance provider within the mea n-
ing of Alberta ta x legislation, other provincial treasurers could have
assessed t he corporation for business conducted within their own juris-
dictions. Moreover, the services offered by Protection are widespread
in the Canadian marketplace. Many companies offer extended warran-
ties on furniture, appliances, and electronic equipment. Many retailers
1 2011 ABCA 214 [Brick Protection].
2 RSA 2000, c I-3.

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