Human activity has been clearly identified as the main cause behind the rapid rise in greenhouse gas emissions, which in turn is the leading cause of climate change1. Although the Paris Agreement, adopted by 196 countries, including Canada—sought to limit global warming to 1.5 degrees Celsius above pre-industrial levels, scientists now agree that this target is no longer within reach2. Current climate models project that global temperatures could rise by as much as 2.8 degrees Celsius by the end of the century3.
Climate change has wide-ranging consequences impacting not only weather patterns but also infrastructure, public health, and human safety.
Weather events also carry significant economic costs, particularly in the insurance sector, which faces increasing exposure to climate-related claims.
The Recurrence of Climate Events and the Evolution of Scientific Knowledge
As scientific understanding of climate events continues to evolve—and as these events become more frequent—a crucial question arises: are these events still truly unforeseeable?
Risk assessment models now available to insurers make it possible to anticipate certain climate-related risks, allowing them to evaluate the likelihood of events such as floods or wildfires.
Considering the wealth of scientific data on climate change—and the availability of advanced modelling tools capable of identifying vulnerable regions is it not possible to predict certain climate-related events?
The Concept of Force Majeure Tested by Climate Change
The concept of force majeure naturally comes to mind when thinking of natural disasters. As defined by the Civil Code of Québec, it refers to an unforeseeable and irresistible event that prevents a party from fulfilling their obligations4. Common examples include earthquakes, storms, fires, floods, major strikes, or wars.
However, events such as floods or wildfires are increasingly well documented and anticipated, particularly in regions identified as high-risk. This growing foreseeability weakens the validity of invoking force majeure as a defense.
Indeed, courts appear to be increasingly adopting a contextual interpretation: what was once considered unforeseeable may now be deemed foreseeable. For example, in the case Commission scolaire Kativik v. Roy5, the Court rejected the argument that a snowstorm in Nunavik constituted force majeure, deeming it recurrent and therefore foreseeable.
For insurers, this shift presents a double challenge. It becomes increasingly difficult to invoke general exclusions without precise and limiting wording. The case Montcap Financial v. Boréal Assurances6 illustrates this trend: the Court ordered the insurer to compensate the insured for losses sustained during the 1998 ice storm, rejecting the exclusions related to power outages and temperature variations. The Court held that the “all-risk” policy issued to the insured covered this force majeure event by default and that only a clear and specific exclusion could have limited the insurance coverage. In the absence of clear exclusions, courts tend to interpret “all-risk” policies broadly in favour of the insured.
Denial of Coverage Based on the Interpretation of the Term “Occurrence”
The availability of new scientific tools and public knowledge of high-risk zones for climate-related events raises questions about the possible emergence of litigation regarding insurance coverage based on the interpretation of the term “Occurrence” in insurance policies.
Many such policies define an “Occurrence” as “an accident, act, or event that is neither expected nor intended from the standpoint of the Insured.” This notion could become central to disputes between the parties to an insurance contract regarding the coverage of climate events.
The landmark Progressive Home decision defines an accident as being “neither expected nor intended.” More specifically, the Supreme Court stated:
“Fortuity is built into the definition of “accident” itself as the insured is required to show that the damage was “neither expected nor intended from the standpoint of the Insured”. This definition is consistent with this Court’s core understanding of “accident”: “an unlooked-for mishap or an untoward event which is not expected or designed.”7
[references omitted]
In the context of climate change, if an insurer can reasonably demonstrate that “from the standpoint of the insured,” the damages were foreseeable—for example, when the insured properties are located in flood-prone zones or areas at risk of fire or hail events—some insurers may be inclined to deny coverage following a so-called climate event that is… foreseeable.
Conclusion
The year 2024 marked a record high for climate-related insurance losses in Canada, with the Insurance Bureau of Canada estimating damages at over $8.5 billion8. This sharp increase compared to previous years9 highlights the growing challenges facing insurers, policyholders, and society more broadly—whether it’s the withdrawal of insurers from certain markets, the rise in insurance premiums, the redefinition of exclusions, or the increasing number of coverage disputes.
As recently as July 13, Quebec was hit by severe flooding and landslides, offering yet another stark reminder of our changing climate. In this new reality, adapting coverage strategies and fostering innovation is not just prudent—it’s essential.
Our team is available to assist with analyzing these complex issues and providing legal opinions on coverage matters, as needed.
1United Nations, Action Climat, « En quoi consistent les changements climatiques? », en ligne : un.org/fr/climatechange/what-is-climate-change. [United Nations]
2See amongst others : Service de changement climatique C3S de Copernicus, as cited by reporterre.net/le-seuil-de-1-5-OC-de-rechauffement-officiellement-depasse-en-2024.
3United Nations.
4Article 1470 C.C.Q.
5Kativik v. Roy, 2006 QCCS 1887.
6Montcap Financial Corporation c. Boréal assurances inc. 2000 CanLII 18463 (QCCS).
7Progressive Home Ltd v. Cie canadienne d’assurances générales Lombard, Assurances 2010 CSC 33, CanLII [2010] 2 RCS 245, par. 47.
8Bureau d’assurance du Canada, Communiqué de presse, 13 janvier 2025, https://bac-quebec.qc.ca/media/wj4nm1h5/ibc_nr-2025-01-13_natcat_wraprelease_fr.pdf.
9See BAC (2023: 3.1 billion $ of fees linked to climate events, and 2001 to 2010: average of de 700 M $ per years per insurer.)
