Resolving an Insurance Claim Dispute

Understanding Insurance Claim Disputes

Dealing with the aftermath of a motor vehicle accident can be stressful enough. Now imagine that your insurance company refuses to honour your coverage for the damages and injuries. Disputes often arise between the insurance companies and the insured, particularly when the insurance company denies coverage and refuses to cover the costs of your injuries, suffering, and losses. Unfortunately, insurance disputes can cause undue delays and complications to the personal injury claim process. It is important for individuals to empower themselves with the information and tools needed to navigate the process that comes with insurance disputes.

When it comes to motor vehicle accidents, insurance companies receive many claims and the companies closely examine and review each claim as it is received by their office. Insurance companies will sometimes, after review, conclude that they will not cover the damages incurred as a result of the accident. There are avenues that both parties can take to resolve insurance claim disputes. Options include Alternate Dispute Resolution and/or retaining a lawyer.

Tut v. RBC General Insurance Company, 2011 ONCA 644

To further understand the implications invoked by insurance disputes in personal injury claims, we can examine the case, Tut v. RBC General Insurance Company. In this case, RBC Insurance Company (RBC) appealed the decision of the application judge which indicated that RBC has a duty to indemnify the respondents, Nagraj Singh Tut and Gurmeet Kaur Tut.  RBC argued that because the 20 year old, Gurmeet had alcohol in his blood at the time of his accident and should therefore not have been driving his mother’s car, this violation under the Highway Traffic Act constituted a breach in the insurance contract between the Tut family and RBC.

The accident occurred on the morning after the boy’s 20th birthday party.  Nagraj had drinks in the evening with his friends and after a full night’s sleep, he received permission from his mother, to drive his friends homeAt that time, both Nagraj and his mother sincerely believed that Nagraj was sober. Nagraj’s parents were not home for the entirety of his party so they were unaware of how much alcohol he consumed; however, he displayed no signs of being impaired when his mother spoke to him in the morning prior to driving The accident occurred when Nagraj attempted to pass another car using the gravel shoulder and veered off the road.

The St. Michael’s Hospital Laboratory Results Report indicated that there was a presence of alcohol in Nagraj’s system on the date of the accident.  Under the Highway Traffic Act, novice drivers and anyone 21 years and under are not permitted to drive with any amount of alcohol in their system. Nagraj had a blood alcohol concentration of 26.8 mmol/L.

RBC denied coverage to Nagraj because he had a blood alcohol concentration greater than zero in his system at the time of the accident. Both in the original trial and on appeal, the judges favored the respondents in deciding that RBC cannot deny coverage.n this case, the courts concluded that RBC failed to meet the onus of proving that Mrs. Tut was aware or ought to have known that she was permitting her son to drive when he was not authorized, by law, to do so.

Both Nagraj and his mother genuinely believed that the boy had a zero alcohol concentration level (and both had discussed and were in prior agreement on a decision to never drive after drinking).  The Court ultimately held RBC responsible for providing coverage to the claimants.

Reasons an Insurance Company Denies Coverage

An insurance company may deny a claim for a number of varying reasons. According to Navigators Insurance Company, an insurance claim may be denied for any of the four reasons below:

1. Material Mis-Representation in Insurance Claim Denials
2. False and Fraudulent Claims
3. Unlawful Acts
4. Lack of Coverage

In the case referenced above, RBC denied insurance for reason number 3 listed above. However, the courts ruled in favor of the respondents even though the accident occurred during an unlawful act.

What Are Your Option if your insurer refuses to pay

There are several options to consider when an insurance company denies a claim. You may file a lawsuit against the insurer or apply for mediation and arbitration of your dispute.  A personal injury lawyer is well versed in the area of insurance law and can assess the facts of your case and  give expert advice on the strength of your claim.  Your lawyer will explain the options available for you to favourably resolve your claim. If you choose to have your case decided through the services provided by the Ontario government and your case is taken to arbitration, you are advised to seek legal representation because the process can become very complicated and insurance companies generally have their own lawyers representing them.

Alternative Dispute Resolutions (ADR) is a means of settling insurance claim disputes in Ontario with the goal of helping a claimant and their insurer reach a mutually agreeable outcome in a neutral setting. The Financial Services Commission of Ontario offers an essential supporting structure and arbitrators for ADR and also provides resources in dispute resolution, regulates the insurance sector, pension plans, credit unions, and more. FSCO’s Dispute Resolution Services include mediation, neutral evaluation, arbitration, appeal, and variation/revocation. The first step in the process is mediation. During the mediation phase, a mediator assists both parties (the insurance company and the insured) resolve the dispute. The job of the mediator is to work with both parties in an effort to reach a solution that is mutually agreed upon. Both parties need to be active participants in the mediation process.

If the dispute is not settled in the mediation phase, then you have two choices: you can apply to have your claim settled by  arbitration or you may file a lawsuit against the insurance company.  If you choose arbitration, you may hire an independent/private arbitrator or apply to FSCO arbitration. In the case of FSCO arbitration, you must apply within two years after the insurance company refuses to pay your losses in the accident. It is important to take special note of the time frame allotted to apply for arbitration. Of course, if the dispute is still not settled, it will move through the process to the appeal phase and then variation/revocation.

The personal injury lawyers at Injury Lawyers of Ontario (ILO) are experts in negligence law particularly pertaining to the Ontario Insurance Act. Our vast experience in resolving disputes arising from insurance claims allow us to provide unequaled representation for claimants who have had their coverage denied or disputed.  Contact an ILO office today to discuss the facts of your case and find out how to proceed when your insurance company refuses to cover the cost of your injuries and losses.