It is not uncommon for an insurance company to deny a claim that should be paid to you. Sometimes a simple letter is enough to restore the situation and receive compensation. If your insurer stubbornly refuses your claim, however, you will have to take more serious steps. This article aims to guide you through these procedures to give you a better chance of obtaining compensation following unfortunate situations.
There are different situations in which the insurer could refuse to compensate you. Here are some common examples:
- Home insurance: A loss occurs in your home (eg water damage, fire, etc.) and your insurer refuses to compensate you for repairs or damaged property.
- Home or automobile insurance: You are the victim of theft and your insurer refuses to compensate you for various reasons (eg alleges that the goods were not stolen or that their value is less than what is claimed).
- Disability insurance: Your insurer refuses to recognize your disability and does not pay you the benefits provided for in the contract.
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You can use the links below to quickly navigate to the section you’re interested in (we recommend reading the entire article!):
1) Recourse against your insurance company – How to get paid?
Step 1: File a claim with your insurer
Step 2: Request a review of the decision in case of refusal
Step 3: Send a letter of formal notice to your insurer
Step 4: File a legal claim against your insurance company
2) Recourse against the insurer of a third party for the damage caused
3) Example of formal notice against your insurer
4) Example of formal notice against the insurer of a third party
RECOURSE AGAINST YOUR OWN INSURANCE COMPANY – HOW TO GET PAID?
The role of an insurance policy is to protect you financially during unexpected situations. Despite this, it happens that an insurance company refuses to indemnify its client. Various reasons can then be put forward by your insurer, even if these prove to be unfounded.
Sometimes the insurer denies the claim simply because they don’t believe you. This situation often arises when the claim is for stolen property. The insurer could alleviate that some of these items were not stolen, that the theft itself did not take place, and that the story is fabricated.
Most of the time, the refusal will be based on an exclusion provided for by the insurance policy. For example, there might be an exclusion in your home insurance policy for damage caused by flooding. Your disability insurance may also provide that you are not covered for pre-existing conditions. Some insurers apply their exclusions very broadly.
Note that insurers can be wrong! It is not uncommon for an insurer to refuse to compensate its client for any claim, only to then retract and agree to pay. Follow the steps below to obtain compensation from your insurer.
Step 1: File a claim with your insurer
In any complaint procedure with your insurer, the first step is to report the loss or event to him. Then, the insured must claim by following the insurer’s internal procedure. This will vary from company to company. The insurer’s objective is to obtain as much information as possible about the claim to assess whether it is covered by the insurance policy and to determine the amount of compensation to which you are entitled.
Generally, the insurance company will assign an adjuster to the file. The latter will be responsible for investigating the claims and determining whether or not they are payable. Depending on the type of claim, the adjuster may request a statement from the insured. This type of request will be made in particular in the context of theft of property, fire, or vehicle theft.
In the case of a claim for disability insurance, an analysis will generally be made to determine if the insured is disabled according to the definition of disability provided for in the contract. This analysis will normally be based on the medical documentation that supports your disability. Unlike auto and home insurance, the investigation is carried out by the insurer’s claims manager and not a claims adjuster.
Step 2: File a request for review if the claim is denied
Has your claim been denied by your insurer? In this case, there is usually an internal review process. Depending on the reasons for the refusal, it will often be possible to provide additional documentation or explanations to have the insurer’s position changed. Some denials can easily be overturned if the proper documentation is provided, such as a report from your doctor for a disability insurance claim.
It is often appropriate to request an internal review before turning to traditional legal means. This could allow you to settle the case more quickly and avoid incurring additional costs. When the request for review is refused, it will be time to move on to the formal notice stage.
Step 3: Send a letter of formal notice to his insurance company
The formal notice gives your insurer the last chance: either he pays your claim, or you threaten to sue him. The letter of formal notice generally contains a description of the situation and a deadline to react before taking legal action. Examples of formal notices are provided later in this article.
In many cases, a letter of formal notice will be sufficient and you will be able to reach a satisfactory agreement without having to turn to the courts. Insurers do not want to be sued if they find that their position is not convincing from a legal point of view. If there are weaknesses in the insurer’s file, the formal notice often makes it possible to reverse their initial decision.
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Step 4: Sue your insurer by filing a lawsuit
Does your insurer still refuse to compensate you, even after sending a formal notice? The ultimate option will be filing a formal lawsuit to sue your insurer. Make sure you have tried all the previous steps before embarking on legal action.
When the claim is for an amount equal to or less than $15,000, it may be heard by the Small Claims Division. Small claims proceedings are much simpler and more affordable since lawyers are not allowed on the day of the trial. A lawyer can, however, advise you and draft a tailor-made legal claim.
For claims over $15,000.00, you will need to file a lawsuit in the Court of Quebec or the Superior Court. These procedures are much more complex: it is strongly suggested to call upon the services of a lawyer to obtain the required support.
Be aware that pre-trial settlement agreements are quite common in cases involving insurance companies. This means in other words that a legal claim does not always lead to a trial. Sometimes insurance companies choose to settle the problem outside of court. Indeed, insurers generally prefer to avoid unnecessarily spending large sums in lawyers’ fees for a case that they are not sure of winning.
Optional step: Filing a complaint with the Autorité des Marchés Financiers
An alternative available to you is to file a complaint with the Autorité des Marchés Financiers (AMF). Essentially, the AMF’s mission is to regulate, among other things, the insurance sector and to help its consumers. It can then give you access to various dispute resolution services with an insurer.
Such a complaint can put more pressure on the shoulders of your insurer. The insurer may then be more inclined to conclude a settlement agreement, thus avoiding you having to initiate legal proceedings.
RECOURSE AGAINST THE INSURER OF A THIRD PARTY FOR DAMAGES CAUSED TO YOU
Now that we’ve covered the different recourses available to you against your insurer, let’s see what you can do to obtain compensation from a third-party insurer. Indeed, the Civil Code provides that you can directly sue the insurer of a third party if the latter holds a civil or professional liability insurance policy.
For example, you can sue your friend’s insurer if you hurt yourself slipping on his dangerous steps. It can be tricky to sue a friend in such a situation. Fortunately, any home insurance normally comes with liability coverage of at least $1 million. It is then possible to sue your friend’s insurer directly, without using your friend.
If the fault is committed by an entrepreneur or a professional, the company’s insurer generally takes charge of the file. Any expert is then assigned to analyze the file and determine if the responsibility of the insured (the professional or the company) is engaged.
When trying to enforce a claim against a third-party insurer, it is common to send a demand letter as the first step. This letter then triggers the investigation process with the opposing party’s insurer.
Following the transmission of the letter of formal notice, a claims adjuster from the insurance company normally checks whether the liability of his insured is engaged. If he considers that the responsibility is engaged, he can formulate a settlement offer. That said, it is common for the insurer to deny the liability of its insured unless it is a flagrant situation. It will then be necessary to proceed to the stage of the legal claim, as explained above in the article.
EXAMPLE OF FORMAL NOTICE AGAINST HIS OWN INSURANCE COMPANY
Below is an example of a letter of formal notice that you can send to your insurer. This is only a general example: it is always recommended to call on the services of a lawyer to draft your formal notice!
