What is “bad faith” in a disability insurance claim?

September 17, 2007, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

The relationship between an insured and the disability insurance company has been described but the Latin term - "uberiima fides".  Basically, this means that the disability insurer is required to treat its policy holder with the utmost of good faith when dealing with the claim.  When this is breached then a bad faith claim may exist for the insured to pursue against the insurer.  The courts have dealt with the issue of what constitutes bad faith and, among other things, have determined that the insured is entitled to receive correct information, a fair interpretation of the policy and the prompt payment of a meritorious claim.  The disability insurer may not treat the insured as an adversary whose interests may be disregarded.

In bad faith claims, the court has said that damages can be awarded against the insurer in exceptional cases for "malicious, oppressive and high-handed" misconduct that "offends the court´s sense of decency".  This test restricts any damage award to actions or misconduct that represents a clearly noticeable departure from ordinary standards of decent behaviour.  The award for punitive damages is neither straightforward nor automatic.  The courts have held that punitive damages should be awarded only when all other penalties have been considered and have been found to be inadequate for furthering the court´s objectives of "retribution, deterrence and denunciation".

In future blogs we will take a further look into punitive damages and disability claims along with a review of some cases where punitive damages has been considered in the context of a disability insurance claim.

Posted under Personal Injury, Disability Insurance

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About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us toll-free at 1-866-414-4878.

The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.

Practice Areas

  1. Car accidents
  2. Motorcycle accidents
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  4. Catastrophic injury
  5. Brain or Head injury
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  5. Fractures or broken bone injury
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  8. Truck accidents
  9. Amputation and disfigurement
  10. Fibromyalgia
  11. Nursing Home Fatality Claims

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