ICBC needs to Review Injury Claim process in Light of Punitive Damages Award Against a BC Insurer

In this punitive damage award against an insurance company,(Sidhu v. The Wawanesa Mutual Insurance Company,2011 BCSC 1117), a family in Surrey, British Columbia, purchased fire insurance and their home was damaged by an accidental fire. Wawanesa refused to pay them for the loss because they alleged the claimants deliberately started the fire in order to recover the insurance money. The Court punished the insurance company with a $50,00.00 award for punitive damages for failing to properly investigate.

 Insurance companies, like ICBC, are often exposed to personal injury accident claims investigation delays which can result in punitive damage awards. In a circumstance of a car accident injury, ICBC usually has an obligation to properly investigate a personal injury accident if an accident injury claim has been made due to a car accident in British Columbia.  Read my article on how to make an ICBC injury claim without a lawyer.

 Punitive damages are awarded against insurance companies, such as ICBC,  in exceptional cases for malicious, oppressive and high-handed misconduct that offends the court’s sense of decency. The legal test to date limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour. Because the objective is to punish the insurance company  rather than compensate the claimant,  punitive damages are a mix between  between as the judge stated, “ civil law (compensation) and criminal law (punishment)”.

In this case  family argued that they were not responsible for the fire and that Wawanesa acted wrongfully, in bad faith, and has been high handed and disrespectful in the denial of their claim. They are asking for aggravated and punitive damages.

On the evidence before the judge  he found that the insurance company  did not undertake the investigation or assess the claim in a fair or reasonable fashion.  The delay in properly assessing the claim left a serious cloud over their heads for far too long. The claimants were forced to make alternate arrangements without support from Wawanesa, all the while facing an allegation of a serious fraud.

With respect to punitive damages against insurance companies that delay investigation and deny claims the judge stated,

“[190]  House insurance contracts are purchased by the public to achieve a level of assurance and peace of mind that they will be treated promptly and fairly if their home is damaged by fire. Punitive damages are not compensatory damages and the focus of this claim must be on the blameworthy conduct of the insurer.

[191]     The Supreme Court of Canada in Whiten discussed some of the factors influencing the assessment of blameworthiness. In my view the conduct that supports a conclusion of blameworthy conduct of the part of the insurer is the dilatory manner in which the claim was handled. This delay does not appear to have targeted the plaintiffs; but the charges outlined in the January 27, 2007 letter had an offensive tone. The plaintiffs were unsophisticated and vulnerable victims of the delay. The plaintiffs did not demonstrate any hostility or anger toward the insurer.

[192]     The conduct of the insurer, although serious, does not require a large penalty to reflect the denunciation required of the insurer’s conduct. The insurer was negligent in the handling of this claim and that disregard of the plaintiffs’ reasonable expectations rises to the level of blameworthiness discussed in Whiten.  The issue of the measure of the plaintiffs’ claims under the policy is not to be decided at this time. I have no accurate measure of the damages except the estimations contained in the proof of loss filed by Hardip. The house was sold and I have no evidence as to the impact of the fire damage on the sale price.

[193]     In Whiten, the Court discussed the importance of considering the proportionality of the measure of the punitive damages. There is no direct correlation, but the measure of the loss can be a factor in the assessment of punitive damages.

[194]     Many of the items listed on the proof of loss were items stolen from the house after the fire. The proof of loss lists a total of $110,968. I do not believe that amount represents the cost to repair the fire damage to the structure; I do not know what the plaintiffs’ total claim will be.

[195]     In the result, the plaintiffs will recover damages under this head in the sum of $50,000. I conclude that this amount will be sufficient to deter the defendant from repeating this conduct.”  

It seems to me for a company this size this award appears to be  less than a slap on the wrist. Posted by Mr. Renn A. Holness

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