Insurer Tries To Establish Breach Of Contract On Part Of Insured

There’s an old saying that goes, “the devil’s in the details.” This is something we experience often in insurance contracts, and it’s something all people who carry insurance can keep in mind. But exactly how much attention to the small details is needed to keep an insurance policy valid? In a recent case heard before the Court of Appeal for Ontario, an insured person forgot to update her son’s contact information. The court had to determine if this failure was sufficient to nullify the policy.

The background

The driver of the car was insured under an insurance policy purchased by his mother and her husband (the “insured”). The plaintiff was injured when the driver caused a single-vehicle accident after speeding down a road and flipping the car where the road ended. The accident occurred on June 23, 2008. He later pled guilty to Dangerous Driving. When the plaintiff attempted to secure payment to satisfy the $300,000 owed to them, the insurer claimed the insured had forfeited the coverage after failing to cooperate with their investigation.

A failure to cooperate?

The insured provided a statement to a claims adjuster on July 3, 2008. This statement offered no information around the details of the accident. In the claim, she advised that she had sold her home, and her son would sometimes stay with his girlfriend, and sometimes with a friend. She did not provide an address or contact info at that time. She later provided a phone number for her son.

After the plaintiffs (injured in the accident) filed a statement of claim on June 21, 2010, the insurer mailed notice to the insured that the amount claimed exceeded her policy limit. She was also advised of the importance of cooperating in the defence of the action, noting “We ask you to keep us advised of any change of address.”

The insurer hired legal representation who on January 17, 2011, mailed a letter to the insured at her old address, which she had previously told the insurer she had moved out of. The letter was returned marked “moved, address unknown.” The insurer hired someone to find the insured, but they were unable to do so.

Discovery was scheduled to begin in June 2013. The insurer wrote to the insured at various addresses, advising her of the importance to cooperate. However, they received no reply to those letters. She was eventually located in October 2014.

By this time, the insurer argued the insured had breached the policy by failing to cooperate in defending the action, and specifically, that she breached the policy by failing to assist in getting the driver to cooperate.

The trial and appeal

The motion judge found that the insurer had failed to establish a breach of the policy and that even if she had, she was entitled to relief from forfeiture. The trial judge granted summary judgment, ordering the insurer to pay the plaintiffs.

The insurer appealed, but the court agreed with the motion judge that the insured’s actions were not substantial enough to demonstrate a breach of her duty to cooperate. There was no evidence the insured was encouraging her son to refuse to cooperate, nor had she failed in requests to locate him. The only thing she had failed to do was notify the insurer of her updated contact information, which is in itself not serious enough to lead to a breach of contract.

The personal injury lawyers at Derfel Injury Law have years of experience helping clients who have been injured in automobile accidents. Contact us today to meet the professional team who will work tirelessly to achieve the best possible resolution to your automobile accident injury claim. Our office is conveniently located in Toronto. Call us at 416.847.3580 to schedule a visit at the individual office closest to you or contact us using the form below.