The Supreme Court of Canada protects the little guy.

• Author: Billingsley, Barbara
• Position: Special Report on Insurance - Supreme Court stands up for the insured in several insurance contract disputes

Do you have an insurance contract?

Do you know and understand your rights and obligations under that contract?

If you have a dispute with your insurance company, how can you be sure that a court will protect you, the "little guy", in the face of the arguments put forward by a large, possibly even multinational, insurance company?

If you are an adult in Canada and own property of any value (such as a car or a house) or are involved in activities that pose risk to others (like driving a car), it is likely that you have entered into at least one insurance contract. It might be a property insurance contract, a liability insurance contract, a life insurance contract, or even a combination of different types of insurance. As an individual insured under the contract, you are the little guy (the insured) in the contractual relationship.

The party who provides insurance coverage under the contract, being a reasonably wealthy insurance company, is the big guy (the insurer). Almost certainly, the insurance company knows the details of the contract and its rights under the contract better than you do. After all, the insurance company wrote the contract and enters into insurance contracts every day. lf there is a dispute about the contract or a claim you make under the contract, the insurance company probably has more money than you do to spend on hiring a lawyer to take the dispute to court. With such a huge imbalance of power, how can you be sure that your rights under the contract will be protected?

Lucky for you, over the past few years the Supreme Court of Canada has made a point of protecting the interests of the little guy in insurance contract disputes. Since February 22, 2002, when the Supreme Court of Canada issued its landmark decision in Whiten v. Pilot Insurance Co., it has heard several cases involving disputes between insureds and insurers (see list at end of article). The fact that the Supreme Court of Canada has heard so many insurance cases in recent years is significant because it only hears cases which it considers to be of national importance. The Supreme Court has obviously recognized that insurance disputes between insureds and insurers are important matters of national interest. Further, in each of these cases, the Supreme Court has ruled in favour of the insured. Because the Supreme Court of Canada is the top court in the land, these rulings must be followed by all other Canadian courts. So, when it comes to insurance law matters, the Supreme Court of Canada has clearly been developing law to protect the interests of the little guy.

The purpose of this paper is to provide a closer look at what the Supreme Court has been saying in its recent insurance law decisions and to demonstrate how the Court's rulings address the contractual power imbalance between an insured and an insurance company. I begin by briefly summarizing the facts and findings of the Court in each case. For the purposes of these summaries, I have grouped the cases according to the major insurance issue being addressed by the Court. Following this outline of the cases, I offer some comments about the lessons to be drawn from the Court decisions with respect to the contractual relationship between the insured and the insurer.

Summary of the Cases

Insurer's Duty to Respond to a Claim

Whiten v. Pilot Insurance Co., 2002

The Whiten family home, which was insured by the Pilot Insurance Co., burned down on a winter night. The Whitens lost everything except the clothes on their backs and were literally left out in the cold. All of the evidence obtained by the insurance company in investigating the loss (including reports from the fire department and the Insurance Crime Prevention Bureau) indicated that the fire was caused by...