Insurers Not Obliged to Advise Insured of Appeal Deadlines
An important recent decision from the Ontario Court of Appeal highlights a vital fact for insured persons, namely that an insurer that has denied or discontinued benefits is under no legal obligation to advise the insured of the firm statutory deadline for appealing that decision.
The facts of the case involved a self-employed eavestrough installer who had purchased an insurance policy from the insurer designed to cover against disability for accidents. In 2007, he fell from a roof and suffered serious injuries for which he claimed and received disability benefits until early 2012 when the insurer terminated the benefits and took the position that the insured suffered from no longer having a “total disability” under the definition found in the policy. The insured was advised of the insurer’s position in a letter, which also indicated that if the insured disagreed with the decision, he could submit medical records demonstrating he was still totally disabled.
Based on the insurer’s letter, the insured clearly understood that his benefits had been terminated and considered hiring a lawyer, but could not afford to do so at the time. More than two years passed and the insured did finally consult a lawyer who advised him of the now-expired two-year limitation period for bringing a court action which began to run the moment the insured received the insurer’s letter. Regardless of the expired limitation period, the insured nonetheless tried to launch a court claim in mid-2015 which the insurer succeeded in having dismissed as being out of time. The insured then brought the matter before the Court of Appeal and argued that at the time the insurer sent him the letter terminating his benefits, it had a duty of good faith to advise him of the two-year limitation period and that had he known of that deadline, he would have brought an action earlier. The insured also claimed that in light of its own failure to advise him, the insurer could not now rely on the expired limitation period to block his legal action.
The Court of Appeal disagreed. While conceding that the parties to an insurance policy owe each other a duty of “utmost good faith,” the insured’s expectations went beyond that and that the insured was effectively asking the court to require all insurers to disclose law-related information that was outside the policy.
The Court also noted that, unlike in Alberta and B.C., in Ontario there is currently no legislation requiring insurers to give insured persons written notice of the limitation period when it denies a claim. For the court, to impose such an obligation or to read it into the existing legislation would “defeat the purpose of the statute and bring ambiguity, rather than clarity, to the process.”
See the Ontario Court of Appeal decision in Usanovic v. Penncorp Life Insurance Company (La Capitale Financial Security Insurance Company).