Jeweler’s Mutual Insurance coverage Firm has misplaced its attraction of a $45,000 punitive damages award as a result of two Ontario courts discovered the insurer had wrongly questioned the pre-policy possession of jewelry stolen whereas the claimants had been travelling abroad.
“It was open to the trial decide to seek out that Jeweler’s Mutual had accepted that the [claimants] owned the jewelry when it issued the coverage and that Jeweler’s Mutual acted in dangerous religion by investigating the declare, refusing to pay, and defending the motion via trial, on the premise that the [claimants’] pre-policy possession of the jewelry remained in query,” the Ontario Courtroom of Attraction dominated in a decision released Oct. 7.
The case speaks to insurers’ reliance on the attestation of property possession when insureds make on-line purposes for insurance coverage.
The background
In August 2014, Jeweler’s Mutual Insurance coverage Firm issued an insurance coverage coverage to Dung Truong and Thuan Nguyen. The coverage insured six items of jewelry in opposition to varied dangers, together with theft. Primarily based on value determinations submitted by the insureds on the time of software, the coverage valued the jewellery at $502,100.
After arriving in Vietnam, Nguyen carried the jewelry in her purse. On the night of Mar. 7, 2015, when she and her husband Truong had been strolling alongside a avenue in Can Tho Metropolis, two folks on a motorbike snatched Nguyen’s purse and sped off.
After returning to Canada, Truong and Nguyen submitted a proof of loss on Jeweler’s Mutual’s prescribed kind. They claimed $502,100 and described when the theft occurred.
In investigating the declare, Jewelers’ adjuster couldn’t discover proof of a receipt for the misplaced property. It’s because the jewellery was obtained not directly, as presents, because the courts famous.
“The [claimants] had acquired the jewelry in methods not conducive to straightforward proof of possession,” the Ontario Courtroom of Attraction commented in a choice launched on Oct. 7. “Two of the rings had been presents from Mr. Truong’s mom when he and Ms. Nguyen acquired married in 1997. They bought the opposite items from jewelry outlets in Toronto via a mixture of money and trading-in of different items of jewelry. They didn’t pay HST on or receive a receipt from these transactions.”
Due to the tax implications of acquiring jewellery via money and never paying HST, the courtroom noticed, it was unlikely the claimants had been going to have the ability to present receipts of possession.
Jewelers denied the declare, and Truong and Nguyen launched an motion in opposition to the insurer.
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What the decrease courtroom mentioned
The web insurance coverage coverage software kind required Truong and Nguyen to acknowledge the applying was for an “insurance coverage coverage to restore or exchange my jewelry [emphasis added],” and acknowledge the “fraud warning” that appeared as a part of the applying kind.
The fraud warning said the coverage can be void if the property was falsely described to the unfairness of the insurer, or if any data that was materials to the chance to be undertaken was misrepresented or fraudulently omitted.
“Jeweler’s Mutual didn’t request proof of possession or insurable curiosity aside from the [claimants’] attestation within the on-line software,” the Ontario Courtroom of Attraction states. “It issued the coverage in August 2014 with out making any additional inquiry of [Nguyen or Truong].”
The trial decide present in favour of Truong and Nguyen and awarded them $502,100. He additionally awarded an extra $45,000 as punitive damages.
“He was of the view that the [claimants] by no means ought to have been put to the proof of their pre-policy possession of the jewelry as a result of Jeweler’s Mutual accepted the [claimants’] possession when it issued the coverage – a coverage it admitted had not been the results of any materials misrepresentation,” because the Attraction Courtroom characterised the trial decide’s resolution.
“By not paying, and defending, on the premise that after there was a loss the [claimants] needed to show pre-policy possession, Jeweler’s Mutual tried to impose an obligation on the [claimants] that might not have been fairly anticipated by an insured, and arrogated unto itself an un-bargained for proper, in dangerous religion.”
The attraction
Jewelers appealed the $45,000 punitive damages award to the Courtroom of Attraction.
Though the insurer by no means claimed the couple proudly owning the jewelry made a fraudulent software for his or her insurance coverage coverage, Jewelers argued it had a foundation for asking about pre-policy possession as a result of a proof of loss provision within the coverage known as for a list of the misplaced property, together with “copies of all payments, receipts, and associated paperwork that substantiate the stock.”
It claimed this coverage provision made it justifiable to disclaim the declare, and that it had not acted in dangerous religion. The courts agreed dangerous religion claims aren’t computerized: It isn’t dangerous religion, for instance, merely to disclaim a declare after which have that call reversed by a courtroom. Dangerous religion arises based mostly on the precise circumstances during which the claims investigation is performed.
However on this case, the Courtroom of Attraction confirmed the punitive damages award.
“Earlier than litigation, Jeweler’s Mutual responded to the declare by questioning the [claimants], and requiring them to level out the place they bought the jewelry and to offer substantiation,” the Courtroom of Attraction dominated. “Its defence via to the top of trial challenged the [claimants’] honesty about whether or not they ever owned the jewelry. I agree with [Truong and Nguyen] that Jeweler’s Mutual, whereas circuitously alleging misrepresentation, implicitly urged that [they] had sought to insure and declare for jewelry they by no means owned, an assertion which is suggestive of fraud.”
The courtroom went on to notice using the time period “my” within the on-line coverage software, suggesting the policyholder was claiming possession of the property for which they obtained protection.
Function picture courtesy of iStock.com/AdrianHillman
