Causation in Canadian Insurance Law

Abstract

Causation in insurance law is an area where courts continuously experience difficulties. This is largely because in insurance law causation is used as a payout
trigger, a separate and distinct element from the traditional “but for” causation generally found in tort. This article proposes a framework for understanding the mechanics of causation as a payout trigger. This is done largely through a focus on the resulting loss and how it occurred. This framework also provides an opportunity to parse through the problems associated with concurrent causation (for example, when loss is caused by both smoke and fire after a lightning strike). Concurrent causation must be analyzed using a liberal approach derived from the Derksen case. The framework makes use of a temporal analysis to determine the relevance of a cause, working backward from the loss. In the final stages of the analysis, the
language used in the insurance policy must be interpreted using a purposive approach by considering drafting intent, as well as the consequences of coverage and its associated gaps. The article aims to streamline insurance causation analysis in order to promote more consistent and holistic results in insurance coverage disputes.