My insurer refuses to pay. Is that the end of the story?

A denial letter from an insurer often looks final. The tone is courteous, the decision seems well considered, and it is tempting to assume the company knows its contract better than you do. Yet a denial is not a judgment. It is the position of one of the two parties to the contract, and it can be challenged.

First, get the denial and the policy in hand

A denial given over the phone is not enough. Ask for a written answer that identifies the clause the insurer relies on. Ask as well for a complete copy of your policy, with its endorsements: the definitions and exclusions, in small print, often decide the fate of a claim.

Then compare the reason given with the actual wording. An exclusion is sometimes applied more broadly than the contract allows. And the Civil Code of Québec sets a useful rule: in case of doubt, a contract of adhesion, as most insurance policies are, is interpreted in favour of the adhering party or the consumer.

The most common reasons for a denial

An exclusion. The insurer considers that the situation is not covered. The question then becomes one of reading: what exactly does the clause say, and does it really apply to the facts?

A late notice of loss. The law requires the insured to notify the insurer of a loss as soon as they become aware of it. A delay does not, however, automatically cancel the coverage: to rely on it, the insurer must have suffered prejudice because it was not informed in time.

A file considered incomplete. The insurer may require information about the circumstances of the loss and supporting documents. Once it has received the notice of loss, or the information and documents it asked for, it must pay the indemnity within 60 days. A file that drags on is not necessarily a denied file, but that delay is not open-ended.

A misrepresentation when the policy was taken out. The insurer sometimes alleges that information was omitted or inaccurate when the insurance was purchased. The consequences vary a great deal: the law distinguishes, among other things, according to how much the information mattered to the risk and whether there was fraud. This ground always deserves a careful review.

The complaint, and the clock that keeps running

Insurers have a complaint-handling process. If their answer does not satisfy you, your file can be sent to the Autorité des marchés financiers, which may offer conciliation or mediation. These steps can lead to a settlement.

But they come with a trap: filing a complaint does not interrupt prescription. The time limit to go to court is generally three years, and when it starts depends on the circumstances. While the complaint is being processed, that time keeps running. Many people find out too late.

What to do now

Gather everything: the policy, your written exchanges with the insurer, photos, invoices, reports. Write down the date of your notice of loss and the date of the denial. And before signing a release or accepting an amount presented as “final”, make sure you understand what you are giving up.

For the basic rules, see also our practical guide on denied insurance claims.

Sultan Avocat Inc.

This text provides general information and is not legal advice. Every insurance policy has its own clauses and every loss its own facts. If your claim has been denied, seek advice before the time limits run out.