An insurer is required to inform their insured of potential entitlements and to act in utmost good faith.
Browne and Chubb Insurance, FSCO A10-000197, January 6, 2011 – Judith Killoran
Excerpts from Robert Deutschmann’s post on February 19, 2011. The entire post can be found at: http://www.deutschmannlaw.com/index.php?page=news_detail&newsfile=9418
Ms. Browne was involved in a motor vehicle accident on April 30, 2006. She applied for and received statutory accident benefits from Chubb Insurance Company. Chubb terminated weekly caregiver benefits on April 30, 2008. The preliminary issues were to determine (1) if Chubb terminated caregiver benefits in accordance with section 37 of the Schedule, and if not, what were the consequences, and (2) if Chubb required to advise Ms. Browne of her right to apply for a non-earner benefit under the Schedule.
(Ms. Browne) is the mother of two children and was the primary caregiver for her 12-year old daughter at the time of the accident. Her daughter turned 16 years of age on June 8, 2009.
Chubb paid Ms. Browne the caregiver benefit at the rate of $250 per week until the second anniversary of the accident. By letter dated May 8, 2008, Chubb informed Ms. Browne that caregiver benefits were payable for only 104 weeks from the date of loss.
Chubb admitted that the notice of termination in respect of caregiver benefits was inadequate. In particular, the statement that “there is no further entitlement to caregiver benefits past 104 weeks” was incorrect. However, Chubb relied on the Ontario Court of Appeal’s decision in Stranges v. Allstate Insurance Company of Canada. The Ontario Court of Appeal held that inadequate notice does not automatically entitle an insured to payment of benefits. The insured person is still required to prove entitlement.
Ms. Browne submitted that section 37 sets out the steps an insurer must take in assessing whether an injured person is still entitled to either caregiver or non-earner benefits. Subsection 37(2) states that an “insurer shall not discontinue paying a specified benefit” unless specific circumstances occur, such as the failure to provide a new disability certificate or the resumption of employment.
Ms. Browne alleged that Chubb disregarded the section 37 procedure when it terminated her caregiver benefit in that: it never requested that Ms. Browne provide a new disability certificate according to clause 37(1)(a).
(Chubb) terminated the caregiver benefit without requesting or obtaining any updated medical documentation on Ms. Browne’s condition. It also did not reinstate Ms. Browne’s caregiver benefit or request an updated disability certificate when it was informed that it had not followed the steps for termination of the benefit outlined in section 37 of the Schedule.
Section 37 is not ambiguous about what is required of an insurer and an insured person. It is mandatory that an insurer request that the insured person submit a “new” disability certificate before an insurer makes a determination about continuing entitlement to a benefit. Chubb did not request a new disability certificate from Ms. Browne. Therefore, the arbitrator found that Chubb did not terminate caregiver benefits in accordance with section 37 of the Schedule.
Chubb’s responsibility to inform Ms. Browne of her potential entitlement to a non-earner benefit if she met the qualifications in clause 12(1)2 is grounded in its responsibilities to act in utmost good faith to its first-party insured as required by the Insurance Act and its schedules. It is a logical extension of its obligations under section 32 of the Schedule and the consumer protection goals at the heart of the legislation.
After reviewing all of the submissions and circumstances in this case, the arbitrator found that the appropriate remedy for Chubb’s non-compliance with its obligations was to issue an interim order until a full arbitration hearing was held and the hearing arbitrator could then issue a final determination on the issues of entitlement in relation to the discussed dispute.
What this means for you:
- Request the insured person submit a “new” disability certificate before making a determination about continuing entitlement to a benefit.
- Inform the insured of any potential entitlement to a non-earner benefit (presumably any benefit) if they meet the qualifications as set out in the SABS.