Does the duty of good faith require a disability insurer to inform a claimant of a legislative limitation period?
The end of 2017 brought the dismissal of a leave application at the Supreme Court of Canada that relates to this issue and which will be of interest to insurers throughout Ontario and throughout the country.
In Usanovic v. Penncorp,1 the Ontario Court of Appeal had decided that insurers were not obligated to inform insureds of the two-year limitation period when denying benefits.
The claimant sought leave to appeal to the Supreme Court of Canada, with leave having been denied on December 21, 2017. The Ontario Court of Appeal decision and related appellate cases would appear to be the most up-to-date law on the issue.2
Case Details
These arguments were not enough to sway the court in the claimant's favour. The legislative context of Smith v. Co-operators was not comparable to the existing claim and the Court of Appeal was generally reluctant to mandate the content of insurance refusal forms which would be "better left to the legislature." At the basis of the decision is the subtle distinction made as regards to the duty of good faith and the nature of a fiduciary duty. These are not the same thing. The Court of Appeal noted: "In this case ... we are asked to do something more than impose a duty of good faith on insurers to disclose the contents of the insurance policy. We are asked to extend the duty of good faith to require an insurer to disclose information outside the policy – namely, the existence of a limitation period," [emphasis in the original]. Evidently, the Court of Appeal refused to expand the scope of the duty of good faith. To be sure, some jurisdictions in Canada have legislation requiring insurers to inform the claimant of a limitation period in certain circumstances (i.e. British Columbia, Alberta). Ontario's Insurance Act only requires that insurers include a statement in the policy of insurance and certificate stating that all claims are subject to the Limitations Act. With the scope of the duty of good faith not being precisely defined or settled, it is nevertheless clear that as far as the common law is concerned, the duty of good faith does not require an insurer to inform claimants of the legally applicable limitation period. Read the full case decisions - see links below. Footnotes 1 Usanovic v. Penncorp Life Insurance Company (La
Capitale Financial Security Insurance Company), 2017 ONCA 395 (CanLII) The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. |