- Klassen, insurance agent, asked Higgs questions over the phone
- Higgs told R he didn’t have an application for life/health insurance within past three months (false) and misstated the insurance in force on himself
- TJ held both answers to be material misrepresentations within s.134 of Act, voiding the policy
Issues
- Whether a material misrepresentation w.r.t. s.134 of the Act was made to R
Rules
- Insurers cannot be faulted for accepting applications as being true unless they are so conspicuously false as to be self-evidently false to a reasonable insurer
To be self-evidently false, the information given must be sufficiently indicative of something more to be tantamount to notice of the unrevealed
Analysis
- While A alleged there were warnings that should’ve put R on notice that answers in application were not correct if inquiries were made, CA agreed with TJ that statements in application form were not “sufficiently indicative of something more to be tantamount to notice of the unrevealed”
R met onus on it to demonstrate misrepresentation material to the risk
Conclusion
- Appeal dismissed, a material misrepresentation was made to R, coverage denied to A
Kehoe v British Columbia Insurance Co [1993] BCCA [materiality]
Facts
- Kehoe (R) was awarded $60k as indemnity for loss sustained due to burglary of his home
- He searched for a diff insurer when moving, after former insurer, the Guardian, would only renew insurance on unfavourable terms
- R placed insurance with British Columbia Insurance Co (A) and while filling out standard insurance form, R made no reference to previous insurer
- A’s employee stated that when asking about previous claims, if R answered “not here” or “not at this address”, he would’ve asked further questions
- TJ held that A failed to demonstrate there was a reasonable basis for the course of action which A would have adopted if it had been aware of the claims history
Issues
- Whether the TJ erred in requiring A to demonstrate it had a “reasonable basis” for characterizing P’s misrepresentation as material
- Whether the TJ erred in concluding that R’s statement was a misrepresentation
Rules
- Test for determining if a fact is material is an objective one in the sense that the fact must be such that a prudent insurer would take it into account in either deciding whether to decline the risk or in setting a higher premium
- In determining whether a fact as material to the risk of the coverage being extended, one must ask if the insurer was acting as a “reasonable or prudent insurer”
- Burden of proof is on insurer to show materiality
Analysis
- A demonstrated that its own practice, w.r.t. what was considered information material to the risk, was a similar standard as what the industry generally adopted, therefore hard to characterize A as anything other than a reasonable insurer
Conclusion
- Appeal allowed, R’s statement was a misrepresentation, coverage denied
Silva v Sizoo [1997] ON Gen Div
Facts
- Silva (P) sued to enforce disability insurance issued to her by Canada Life Assurance Company through the agency of Sizoo (both Ds)
- D decided that P had made material misrepresentations in application and declared their policy void
Rules
- To avoid a policy on the ground of misrepresentation of one or more material facts in the application/other written material, insurer must show
That the applicant himself filled out the form inaccurately or incompletely and signed it, in which case the applicant is bound by the answers
That the agent of the insurer filled out the form, recorded correct/false/incomplete answers that were verified by the applicant’s signature, in which applicant is bound by answers
Agent incorrectly recorded true and complete answers given by applicant, who then verified the form by signature, in which applicant is bound by answers
But applicant may be able to show special circumstances sufficient to relieve the applicant of the consequences of his negligence or to disentitle the insurer from relying on the applicant’s signature
Innocent non-disclosure and false disclosure is a form of misrepresentation that allows insurer to void the policy, as long as the misrepresentation of fact is known to the insured
- Insured doesn’t have to disclose obvious practices w.r.t. industry or place that any competent underwriter in the field would know
- There is a duty on the insurer not to close his eyes to the obvious, tantamount to notice; and not to refrain from asking because he prefers not to know the answer
- There is no general duty owed by an underwriter to an applicant for coverage to conduct a reasonable investigation or otherwise to act as a reasonably competent underwriter
- An applicant who knows he may not fully understand the application questions due to language, has a fiduciary duty to ensure that answers recorded in application were accurate and full, or take consequences of going forward with inaccurate answers (para 14)
Analysis
- P left out essential info regarding her health and finances when answering questions posed by D for insurance application
Misrepresentations were abound, no reasonable insurer would’ve insured her knowing the real facts
Conclusion
- P not entitled to enforce the policy
What do you do if misrepresentation was result of language difference?
Insured is still responsible to understand the contract
