Insurance claim denied: the rules to know
An insurance policy is a contract governed by the Civil Code of Québec. When a claim is denied or the amount offered is disputed, certain rules apply. This guide presents them in general terms.
In short
In damage insurance, the insurer must pay the indemnity within 60 days of receiving the notice of loss or the documents requested.
In case of doubt, a contract of adhesion or a consumer contract is interpreted in favour of the adhering party or the consumer.
A complaint to the insurer or to the Autorité des marchés financiers does not interrupt the time limit to sue.
What are the obligations of the insured and the insurer?
Reporting the loss. In damage insurance, the insured must notify the insurer of any loss that may be covered, as soon as they become aware of it. Any interested person may also give this notice. An insurer that was not notified and suffered prejudice as a result may invoke a forfeiture clause in the policy.
Paying the indemnity. In damage insurance, the insurer must pay the indemnity within 60 days of receiving the notice of loss or, if it requested them, the relevant information and supporting documents.
What happens in case of misrepresentation?
In damage insurance, when an inaccurate statement was made without bad faith, the insurer generally remains liable for a portion of the indemnity, in proportion to the premium it collected compared with the premium it should have collected. This rule does not apply if bad faith is established or if it is established that the insurer would not have covered the risk had it known the facts.
How is an ambiguous clause interpreted?
In case of doubt, a contract is interpreted in favour of the person who contracted the obligation and against the person who stipulated it. A contract of adhesion or a consumer contract is always interpreted in favour of the adhering party or the consumer.
What remedies are available in case of disagreement?
A complaint to the insurer. The process begins with the insurer, verbally, then with a written complaint if the problem is not resolved.
Transferring the file to the Autorité des marchés financiers. If the response is unsatisfactory, the file can be transferred to the Autorité, which analyzes it and may offer conciliation or mediation. These processes are voluntary: the Autorité cannot compel a party to take part.
A civil lawsuit. It must be filed within the limitation period, generally 3 years. The complaint process does not interrupt this time limit.
What documents should you bring to a consultation?
The complete policy, with endorsements and general conditions
The notice of loss and its date
The refusal letter or settlement offer
The claims adjuster’s report, if any
Photos, invoices and quotes, or the medical record for disability insurance
Consulting a lawyer
This guide presents general rules. Every situation is different and must be assessed on its own facts. To learn more about our practice, see the Insurance Law page or request a consultation.
This guide contains general legal information. It is not legal advice and does not create a lawyer-client relationship.
