It can affect your claim for accident coverage when the insurer withholds information from you

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Dealing with insurance companies and understanding the fine points of your insurance policy can be a frustrating and overwhelming experience. However, it can become even more exasperating when your ability to receive the full benefits of your coverage rests on information required from another person's insurance company.

Case example

This was the situation with which Mr. Vadim Lica was faced, when after being involved in a car accident, he found himself having to request information from the insurer of the party who was liable for the damages.

Mr. Lica held Mr. Kuljit Dhaliwal and Mr. Abdulkarim Nur responsible for a collision on March 7, 2011 in Brampton, Ontario. Mr. Dhaliwal was the driver of the vehicle that struck Mr. Lica's car, but the vehicle was owned by Mr. Nur who was subsequently denied coverage by his insurer State Farm.

This became problematic for Mr. Lica because of the Family Protection Coverage Endorsement clause in his personal insurance policy with his insurer, Intact Insurance Company. The clause stated that Intact would provide additional coverage to Mr. Lica if he was hurt or injured by someone who was uninsured or underinsured.

State Farm's denial of Mr. Nur's coverage, essentially meant that for this particular case, he was underinsured. However, Intact required a legal determination from State Farm confirming why the coverage was denied, to trigger Mr. Lica's underinsured coverage.

However, State Farm, which added itself as a statutory third party in Mr. Lica's action against Mr. Nur, refused to provide this information. As a result, Mr. Lica sought a court order to force State Farm to answer his questions, as well as deliver a sworn Affidavit of Documents.

Mr. Lica argued that he needed the information because it would enable him to claim underinsurance coverage and would also enable Intact, his insurer, to assess their potential liability and make an informed decision.

Therefore, three issues needed to be decided at trial: were Mr. Lica's questions to State Farm relevant; was State Farm required to answer the questions; and was State Farm required to deliver an Affidavit of Documents.

Mr. Nur, Mr. Dhaliwal and Intact Insurance were the defendants in this case, and State Farm Insurance was named as a Statutory Third Party.

Referencing the Court of Appeal decision in" Maccaroni v. Kelly, Justice Price ruled that Mr. Lica's questions to State Farm were relevant. Justice Price noted that relevance of the questions asked at this examination of discovery is determined by the pleading in the action.

Mr. Lica's pleadings were that he could only access his underinsurance coverage from his insurer, Intact Insurance, if it was decided that State Farm was legally justified in denying coverage to Mr. Nur. Therefore, State Farm's refusal to answer the questions affected Mr. Lica's ability to be fully compensated.

Justice Price also noted that many of the questions State Farm refused to answer were included in documents they themselves voluntarily listed in Schedule "A" of their draft Affidavit of Documents. In Justice Price's view, by listing those documents, State Farm was acknowledging that the information within them was relevant to the action. Consequently, it was illogical that they refuse to answer questions based on these same documents.

Justice Price also rejected State Farm's argument that Mr. Lica was challenging its denial of coverage to Mr. Nur and also, that Mr. Lica and his insurer had no legal right to do so. 

Referencing Maccaroni v. Kelly again, Justice Price disagreed that Mr. Lica was challenging State Farm's right to deny coverage to Mr. Nur. Instead, Justice Price concluded that Mr. Lica was simply trying to establish the reasons for the denial so that a court could decide whether or not it was justified, thus allowing the latter to make his claim under the Family Protection Coverage Endorsement clause.

With regards to the second issue, whether or not State Farm was required to answer Mr. Lica's questions, State Farm argued that answering Mr. Lica's questions could prejudice his upcoming liability case against Mr. Nur. The insurer further argued that in their role as statutory third party, they were required to defend their insured Mr. Nur, and not provide anything that may jeopardize his defense in Mr. Lica's case against him.

Justice Price, referencing decisions in Supercom of California Ltd. v. Sovereign General Insurance Co. and Agrico Canada Ltd. v. Stewart, Smith (Canada) Ltd. ultimately concluded that there was no way for the court to decide if the information State Farm would provide in its answers could prejudice Mr. Nur's case, unless they actually saw it.

A compromise solution was reached, whereby Justice Price decided that if State Farm was truly concerned about possibly prejudicing Mr. Nur's case, they could provide the answers to the court in a sealed document and as the representative of the court, Justice Price would decide if the answers were irrelevant to Mr. Lica's claim and if they could potentially prejudice the case against Mr. Nur and Mr. Dhaliwel. As Justice Price saw it, a hypothetical prejudice was not sufficient for State Farm to completely refuse to answer Mr. Lica's questions.

Finally, Justice Price ruled that State Farm was required, under the Rules of Civil Procedure, to serve to the other party an Affidavit of Documents. Therefore, they were obligated to do so by August 15, 2015.

As demonstrated by this case, dealing with insurance companies can be a very stressful and complicated process, especially when you are simultaneously dealing with recovering from the emotional and physical effects of a car accident. The public is at a distinct disadvantage when attempting to handle this process on their own, without consultation and support from an experienced attorney.

At Gluckstein Personal Injury Lawyers, our team of skilled personal injury lawyers are well equipped to fight this battle for you and make sure you receive all the financial benefits you deserve.

If you or a loved one has been involved in an accident, please do not hesitate to give us a call.


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