Insurance and Negligence Claim FAQs

Some coverages include a co-insurance requirement, meaning that you have to obtain coverage up to a certain percentage of the property value at the time of the loss. Insurers can apply a penalty and reduce the amount payable where the amount of coverage is less than the actual value of the insured property.

Replacement cost coverage in a policy covers the full cost of replacing a damaged or lost item with a new item that is of similar quality. Similarly, replacement cost coverage for a building means there is full coverage for the cost of repairs or replacement. Actual cash value (ACV) coverage means that the insurer will apply depreciation to reduce the amount payable. In general, replacement cost coverage is only available if something is actually being replaced.

A reservation of rights letter allows an insurer to investigate and even start adjusting a claim without admitting that the claim is covered under the policy. Normally, an insurer will use a reservation of rights letter to identify potential insurance coverage issues.

Insurers will not always request or require a proof of loss, but there could be deadlines for submitting a proof of loss, depending on the circumstances. It is best to consult with a lawyer if you have questions regarding the submission of a proof of loss, as it is an important document in the adjustment of the claim. In most cases, a proof of loss should be submitted prior to starting a legal claim against the insurer.

In some cases, such as if the insurer believes there was a material change in risk or a material misrepresentation, the insurer will void the policy. Legally, a voided policy is treated as if it were not in place at all at the time of the insured loss. The insurer will generally also return premiums paid under the policy in connection with voiding the policy. A claim must be approached differently if the policy was voided, and it raises unique legal issues.

Most insurance policies contain various exclusions that explain when coverage will not apply. The insurer has the legal obligation to establish that an exclusion applies. There might be general exclusions that apply to all of the policy coverages, and other exclusions that are specific to certain coverages (for instance, exclusions that only apply to flood losses). Sometimes exclusions also contain exceptions, carving out circumstances where the exclusion will not apply.

Policy conditions are requirements that have to be met to maintain coverage. For example, there are several conditions that have to be met after a claim. Certain conditions are set out in legislation and may also be incorporated into the insurance policy (known as statutory conditions). An insurer may deny a claim if they believe that a condition has not been met.

An insurance broker can often put certain types of coverage in place, or “bind” coverage, with an insurer prior to having any approval from the insurer. Coverage is in place as soon as the coverage is “bound”. A broker who can bind coverage for a given insurer is sometimes referred to as a “binding agent” or as having “binding authority” for that insurer. Similarly, a “binder” is a brief summary of coverage provided to an individual or business prior to their entire policy being available.

Yes, in some cases, a claim must be pursued against both an insurer and an insurance broker if there are issues with the insurer’s conduct and the broker also failed in their duties. Depending on the circumstances, both claims may be pursued in the same lawsuit.

Often, disputes about what was requested or discussed with a broker are complex and may involve the analysis of notes, memos, call recordings, emails, applications, and other documents.

In some cases, depreciation may be applied to items, buildings, finishings, or other insured property based on their age and condition. Betterment is a concept that refers to when someone receives a perceived benefit by obtaining a replacement that is better than what they had previously, which was damaged.

An insurer might allege that there was a material change in risk where the risk changed after the policy was issued. An example of a material change in risk might be if an owner-occupied dwelling were changed to a rental property. A material misrepresentation might allow the insurer to void the policy so that, legally, it is treated as if there was no policy in place on the date of an insured loss.

An insurer might allege that there is a material misrepresentation where facts were misrepresented on an insurance application or in other communications. A material misrepresentation might allow an insurer to void an insurance policy.

With a non-waiver agreement, an insurer asks its policyholder to sign an agreement, acknowledging that the insurer is going to investigate a claim but is not waiving its right to take certain steps, such as denying the claim. A lawyer with experience in property insurance claims should be consulted prior to signing a non-waiver agreement.

In a subrogated action, an insurer commences a lawsuit in a policyholder’s name against a person or corporation who caused a loss to recover. For instance, an insurance company may sue an electrical contractor if their work caused a fire loss in order to recover what they paid out to the insured.

Uninsured losses are losses that are not covered under an insurance policy. In some cases, uninsured losses may be recoverable in a broker negligence claim.

No, a complaint to an insurance regulatory body is based on a broker’s professional obligations under their governing body. Such a complaint does not necessarily involve compensation being provided to you as a result of the broker not meeting their obligations. A lawsuit is commenced to seek compensation for losses caused by the broker failing to meet their legal obligations. A lawsuit is pursued through the court system.

The limitation period for commencing an insurance or broker negligence claim is based on several factors, so it is best to consult with a lawyer. Many types of property claims have a one-year limitation period, though most claims against brokers have a two-year limitation period.

We often claim punitive damages against insurers for failing to meet their duty of good faith in dealing with an insurance claim. In these cases, we request that punitive damages be ordered to punish the insurer for its conduct. We make this assessment on each case based on the facts.

It is difficult to quantify the precise value of damaged contents, or to even recall all contents in the case of an event like a total loss fire. It is important to place a value on all items, including both the estimated replacement cost and depreciated actual cash value (often referred to as the ACV).

You will generally not require proof of purchase for all damaged contents, though it can be helpful for more specialized and valuable goods. It is important to keep receipts as you replace items if you are seeking replacement cost for contents following the loss.

This depends on the terms of your policy. Your policy might provide either coverage for depreciated value, replacement cost value up to a limit, or, in some cases, guaranteed replacement cost coverage without a limit.

In general, you can claim for the increase in your living costs resulting from an insured loss during the period of time that it takes to complete the repair/replacement of the property. However, it is usually necessary for these costs to actually be incurred. In other words, there must be proof that the insured individual(s) actually paid the additional living expenses (often referred to as ALE) and have proof of this payment.

Insurance coverage cases for property losses might result in a court hearing, such as a motion hearing or a full trial.

Like with most civil matters, the majority of cases are resolved in advance of a full court hearing. The timeline of your claim will depend on the facts of your specific case.

Like with most civil matters, the majority of cases are resolved in advance of a full court hearing. The timeline of your claim will depend on the facts of your specific case.

For many insurance coverage cases for large property losses, clients choose to retain us on a contingency fee basis. This is where we are paid a portion of any court-ordered amount or settlement, avoiding the need for a client to pay us fees on a monthly basis, while they may already be in a difficult financial position and dealing with many stressors.

Since property insurance policies are not standardized, our lawyers always review a copy of the complete policy, as well as correspondence with the insurer (including reservation of rights letters, denial letters and/or critical path letters), proofs of loss, schedules of loss, estimates, and other information relating to the value of the claim.

There are instances where clients might have a claim for personal injuries resulting from a property loss, such as from smoke inhalation. We represent clients facing those issues and in determining if there is a claim to be made with respect to those injuries and losses.

An insurance claim might be underpaid when someone does not receive enough to cover the full cost of building repair/replacement, emergency measures, additional living expenses, or the cost to replace contents. For business claims, a claim might be underpaid if the business does not receive enough to cover business interruption/income loss, building repair/replacement, or the cost to replace stock, equipment, or tenant improvements.

A proof of loss is a sworn statement provided following an insurance claim, confirming the details of the loss and the amount that the policyholder is seeking for the claim. There will often be multiple proofs of loss submitted during the course of an insurance claim.

An insurer might request an examination under oath (EUO) if they are seeking further information about an insurance claim, including regarding the cause of the loss and details of the amounts being claimed. The insurer has a lawyer conduct the EUO, and the examination is captured by a court reporter. During the EUO, the insurer’s lawyer will often request that additional documents and information be provided after the examination.

You have the option of having a lawyer assist you with the EUO. A lawyer is not required for the EUO, but a lawyer experienced in property claims will be able to prepare you for the examination and to determine which questions and requests should be refused.

In business property insurance claims, business interruption coverage protects a business for the loss of income that results from a business having to shut down or reduce its operations due to an insured loss. Sometimes, business insurance policies also provide coverage to cover the cost of the business hiring an accountant to calculate this income loss.

An insurer dispute is a claim against an insurance company for breaching the policy, which is a contract. It is a contract dispute. A broker negligence claim is not based on a contract, but rather on an insurance broker’s legal obligation (also known as a duty of care) to obtain proper insurance coverage for their clients. Where an insurance policy does not provide enough coverage for a loss, a negligence claim may be commenced against the broker for failing to obtain proper coverage. The broker might have also failed to give proper advice or made mistakes in obtaining the policy.

In this situation, a lawyer experienced with insurance claims and broker negligence can determine whether the issue is with your insurer because the claim should be covered under your policy, or whether the issue is with your broker for misunderstanding your coverage. In some cases, you might have to commence a claim against both your broker and your insurance policy.