Canada: The Post-Loss Investigation: The Insured's Obligation To Come Clean

The law provides that following a loss, the insured is obliged to cooperate with the insurer during the latter's investigation, to answer its questions and to inform it of all circumstances surrounding the loss1.

The law also provides that any deceitful representation by the insured entails the loss of the right to be indemnified for the risk to which the misrepresentation relates2.

The recent judgment in the matter of Anderson v. Intact compagnie d'assurances3 deals with the scope of the insured's obligation to cooperate with the insurer during the latter's investigation into the loss.

I. The facts

In March 2014, a fire destroyed the immovable property of Charles Anderson (the "Plaintiff"), who came to Canada as a refugee in the 1990s. He then claimed indemnification under his insurance policy from its issuer, Intact Insurance Company (the "Defendant").

In the course of the Defendant's investigation into the loss, several indicia emerged suggesting that the Plaintiff had purchased the property as a nominee on behalf of either his mother, or a company he had incorporated several years before, or both. The insurer therefore sought information to determine whether the Plaintiff had the requisite insurable interest to insure the property.

The investigation took some two years, due in particular to a lack of cooperation on the part of the Plaintiff, who was reluctant to provide information that he knew was relevant, and to the fact that the explanations he gave were vague and imprecise. Under the circumstances, the Defendant notified the Plaintiff of its refusal to indemnify him.

In his lawsuit, the Plaintiff claimed from the Defendant $350,000, of which $100,000 was for compensatory damages on account of psychological and economic harm, based on allegations that the Defendant was at fault in the way in which it handled his insurance claim.

II. The decision

The Superior Court, presided by Justice Frédéric Bachand, had to determine whether the Plaintiff breached his duty to cooperate with the insurer during its investigation into the loss. The Court's analysis led it to conclude that the Plaintiff did so, and that the Defendant was therefore justified in refusing to indemnify him.

The Court indicated that an insurer must show some leniency towards an insured who is an immigrant to Canada and is unfamiliar with the claims process. The judge was nevertheless of the view that this consideration was of little relevance in this case, as the Plaintiff is an educated man who has been living in the country for some 20 years.

The judge concluded that the Plaintiff contravened his obligations of cooperation, transparency and honesty and that the Defendant was well-founded in refusing to indemnify him on that basis. Despite knowing that the roles played by his mother and his company were central to the Defendant's investigation, the Plaintiff failed to provide information that he knew was relevant for the analysis of his claim.

The judge pointed out that an insured is obliged to cooperate with the insurer by providing it with information, where necessary, allowing it to establish the circumstances surrounding the acquisition of insured property. While the Plaintiff did provide several items of information to the Defendant, he was reluctant to disclose all the relevant facts, and even made assertions he knew to be false.

The judge considered that the Plaintiff's deliberate equivocation amounted to bad faith. He was also of the view that his lack of cooperation caused the Defendant harm, as it was never in a position to determine if its insured had a valid insurable interest. The Plaintiff's actions thus led to the forfeiture of his right to the insurance indemnity.

Justice Bachand refused moreover to allow the Plaintiff's claim for compensatory damages, as he did not consider that the Defendant had acted in bad faith in its handling of the insurance claim. While he acknowledged that the Defendant's investigation was unusually long and complex, in his view the facts of the matter justified such a lengthy process.

* * *

This decision confirms the right of an insurer to refuse to indemnify its insured where the latter evinces bad faith and makes assertions that it knows are false.

The Court of Appeal has already stated that "[TRANSLATION] [i]t is not up to the insured to decide if a statement on its part is necessary, or to choose how the insurer is to conduct its investigation."4 Thus, in order to avoid the adverse consequences of forfeiting its right to indemnification, the insured has every interest in disclosing what it knows and in answering the insurer's questions as forthrightly as possible, particularly since an insurance contract demands the utmost good faith of the parties.

Footnote

1 Article 2471 of the Civil Code of Québec:
"At the request of the insurer, the insured shall inform the insurer as soon as possible of all the circumstances surrounding the loss, including its probable cause, the nature and extent of the damage, the location of the insured property, the rights of third persons, and any concurrent insurance; he shall also provide the insurer with vouchers and attest under oath to the truth of the information. ... "

2 Article 2472 of the Civil Code of Québec:
"Any deceitful representation entails the loss of the right of the person making it to any indemnity for the risk to which the representation relates. ... "

3 2018 QCCS 3171

4 Intact Assurances inc. v. 9221-2133 Québec inc. (Centre Mécatech), 2015 QCCA 916, para. 17

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Chomicki Baril Mah LLP
McCague Borlack LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Chomicki Baril Mah LLP
McCague Borlack LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions