Because Insurance Companies and their adjusters often aren't legally required to tell you about important aspects of your claim.
Esau v. Co-operators Life Insurance Co.and Pekarek v. Manufacturers Life Insurance Co., were companion decisions issued at the same time by the BC Court of Appal. Both cases related to disability insurance. In Esau, the insurer was resisting the claim and, in Pekarek, the insurer terminated payments after initially accepting the claim. Both actions were commenced after the expiration of the limitation period. In upholding the dismissal of the actions as being statute-barred, the Court held that the insurers were not required to advise insured's as to the existence of limitation periods.
In Hamilton v. Chris Marion Holdings Ltd., the plaintiff's house suffered water damage. The insurance agent who had placed the insurance assigned the claim to the defendant as an independent insurance adjuster. During a meeting to discuss the repairs to the house, the defendant suggested to the insured that a gun collection in the house be removed for cleaning and safekeeping. The gun collection was taken to the premises of the contractor hired to restore the house, and it was stolen from those premises. The insured sued the independent insurance adjuster for failing to advise that her household insurance would not cover a theft of the gun collection if it was not located inside the house.
In dismissing the claim, the court held that there was not a special relationship imposing a duty on the independent insurance adjuster and that the adjuster was equivalent to a good Samaritan.
The upside to this is the McIvenna v ICBC case in which our BC Court of Appeal says an insurer may owe a duty of care in advising a claimant about benefits and limitations to those benefits.
So, you can't rely on your insurance company or your adjuster to tell you important things about your case, if you do and later want to sue them for bad advice, no advice or bad conduct, you may not be able to. Remember that adjusters work for the insurance company, not you. Promptly consult a lawyer knowledgeable in the area to advise you about your case.
In Branco v American Home Insurance, Zurich Insurace was order to pay $3 Million in punitive damages and AIG was ordered to pay $1.5 Million in punitive damages and $450,000 in aggravated damages. The Plaintiff was injured and his disability insurers failed to honor their contracts in paying the Plaintiff temporary total disability benefits and long term disability benfits. Disability insurance is know as a "peace of mind" contract. When one is injured, you are supposed to have peace of mind because you have insurance for income replacement. In this case, Zurich insurance waited 10 years before making a disability payment.
There was, in the insurer's file, a memo that said:
"I called the claimant and he did not accept our offer and said that he was going to get an attorney. I hope he re-considers because he lives in Portugal and he will have to go back to Canada to get an attorney and this whole process is going to take years to settle. Here we go CANADA!!!!!"
In their reasons the Court alluded to the fact that insurance iindustry practice of not paying disability benefits is all to common, and only a few people have the ability to fight the insurance companies, wondering how many others there are out there. The Court said:
197 The goal of punitive damages is deterrence. Insurers must discontinue exploiting the vulnerability of insureds in times of disaster. The court must also consider the fact that previous awards such as $60,000 in Sarchukand and $1,000,000 in Whiten appear to have done little or nothing to deter insurance companies from their actions.
208 The words of Binnie J. quoted previously in the Whiten case at para. 131 are most appropriate and a perfect summation of the actions of Zurich wherein he states at paragraph 131 The respondent also argues that at the end of the day, it did not profit financially from its misbehaviour. This may also be true, but if so, that result was not for want of trying. The respondent clearly hoped to starve the appellant into a cheap settlement. ... That it failed to do so is due in no small part to appellant's counsel who took a hotly contested claim into an eight-week jury trial on behalf of a client who was effectively without resources of her own; and who obviously could have been starved into submission but for his firm's intervention on her behalf.
215 Although Canadian courts may have believed that the $1 million award in the Whiten case would catch the attention of the insurance industry and the court's disapproval of such actions, it is apparent that the $1 million was not sufficient. These decisions were rendered during the same time period that AIG and Zurich were continuing their pattern of aggressive non-activity on the claim of Branco.
216 The court is cognizant of the fact that a punitive damages award of $3 million may not be particularly significant to the financial bottom line of a successful worldwide insurance company. It is hoped that this award will gain the attention of the insurance industry. The industry must recognize the destruction and devastation that their actions cause in failing to honour their contractual policy commitments to the individuals insured.
217 Both AIG and Zurich failed to deal with Branco's claim in good faith. Each tried to take advantage of Branco's economic vulnerability to gain leverage in negotiating a settlement. The fact that Branco was able to continue to withstand this pressure for so many years from two different fronts is truly remarkable and almost superhuman, even though his resistence may have resulted in irreparable mental distress which may last for the remainder of his lifetime.
218 The court has grave concerns as to how often this type of action occurs in dealing with insurance claims. The court is only cognizant of the cases such as Sarchuk, Whiten and Branco which come before them. If Whiten (in the Whiten case) and Branco, in this case, had not been able to withstand the unbelievable pressure to settle on the terms and conditions originally offered these cases would not have received the attention of the courts either. The question remains: how many individuals have been unable to withstand the financial and psychological pressure of these tactics?
219 The court has earlier quoted extensively from the decision of Binnie J. in the Whiten decision. It is noted that the discussion of the Whiten circumstances and his eloquent statements show an eerily stark similarity to the current situation but to a much lesser degree and over a shorter period of time than the Branco situation.