January 27, 2026
The death of a loved one is traumatic. The disappointment and distress are just added to if their life insurer refuses you a payout on the policy.
Not all denials are valid. Some, of course are.
ISSUE
How do you know whether or not it is worth it to contest the denial?
THE CASE
Because insurance policies are very technical and are made more so by the application of the Insurance Act, you should always consider getting legal advice before deciding not to contest the denial.
An example is the recent Ontario Superior Court decision in Scott Trebell v. Canada Life Assurance Company, in which the beneficiary recovered after a denial which was based on a failure to disclose colon cancer, which was developing unknown to the applicant or her doctors at the time of the application.
A word of caution here: the issues in this case have never been considered in Ontario before. A summary judgment motion is not the last word on the subject – it is just one judge’s opinion. An appeal to the Ontario Court of Appeal or Supreme Court of Canada might change the result in this particular case. It is considered here just as an example of how a denial could be overturned.
The deceased had attended her doctor between the date of the application and the date of delivery of the policy. He had recommended screening for colon cancer (a colonoscopy) which did not occur until after the issuance.
Ms. Trebell died of colon cancer four years after applying for the policy. Between the date of application and the date of issuance of the policy,
Scott Trebell filed a claim for the life insurance proceeds. Dr. Empringham, the insurer’s Medical Director, reviewed the claim file, including the health records released pursuant to the claim. Dr. Empringham concluded that if the insurer had known about the history of rectal bleeding and the medical attendances, London Life would have postponed the Application pending the results of the colonoscopy.
This approach of obtaining medical records after a claim and then looking for a reason to deny coverage is sometimes called “underwriting after the fact”. The permissibility of this approach was also in issue. We discuss that below.
Because of this opinion, London Life issued a coverage denial letter dated May 23, 2018, citing change in insurability from the date of application to the time the policy was delivered. It then issued the estate a cheque for $1,780.00 to refund the premiums.
The central issue on this motion for summary judgment was whether or not section 180(1) (c) of the Act, governing changes in insurability applied, That section contains no time limit for the insurer to deny coverage. Section 184 of the Act does contain a general time limit of two years from issuance for denials due to misrepresentations (but not fraud).
The court describes section 180(c) as “passive and enigmatic.” That is a trap for the applicant and beneficiaries.
After a lengthy discussion of statutory interpretation and grammar, the court determines that favouring the insurer’s interpretation would result in many cases where “neither party can ever be certain the contract exists.”
The judge goes on to say that applying a literal meaning of s. 180(1) (c)
throws a blanket of uncertainty over the insurance and forces the purchaser and the beneficiary to make other financial arrangements in the event the policy was null and void all along. Such an outcome defeats the purpose of buying the insurance.
The judge relies on a leading Supreme Court case on interpretation of insurance policies in general to conclude that:
Conditions allowing the insurer to void the policy, such as material misrepresentations or non-disclosures, are rooted in the insured’s knowledge and the idea that insurance policies are uberrimae fidae – contracts of utmost good faith with implied obligations of mutual disclosure.
However:
The reasonable expectation of life insureds is that, provided they do not lie or withhold information in a questionnaire or medical examination, and after surviving any pre-existing health conditions for two years, their life is insured to look after their loved ones, dependents, business partners, etc.
Another consideration in interpreting insurance policies is “public policy”, which can be hard to understand and apply.
In the Trebell case, the judge says:
If the legislature intended to interfere with the reasonable expectations of parties to settle their affairs with the use of life insurance and other financial instruments, public policy would require clearer wording and a viable means for insureds and beneficiaries to know whether coverage exists.
He concludes, referring to another Supreme Court case that the “literal and isolated meaning or implication of a statutory provision can be rebutted if it produces absurd or extremely unreasonable results”
Underwriting after the fact
What about the underwriting after the fact? Not so friendly to the insured.
I reject the idea that an employee medical professional cannot be impartial. Life insurers employ or retain doctors and other regulated health professionals for consistency and quality control in the assessment of claims. If they instruct their experts to skew assessments toward coverage denial, insurers risk bad faith liability and the professionals risk discipline including licence cancellation.
Dr. Empringham’s evidence could be admitted, not as an expert on the actual medical condition of the life insured during the interval between the application and the policy delivery, but on his role as a participant in the review of Mr. Trebell’s claim. Opinions from such witnesses are admissible, subject to the usual gatekeeper role of the court in the admission and reliance on opinions as an exception to the rule against hearsay.
Findings on the main issue because that evidence was found not to raise a triable issue based upon the statutory interpretation
TAKEAWAYS:
- The entire process of life insurance is complex from application until death.
- This can be a trap for the unwary.
- Even innocent misrepresentations in the application can void coverage.
- Insurers are in the business of collecting premiums and making profits, not the business of paying claims.
- Among the traps for the unwary is the practice of “underwriting after the fact”, but there seems to be very little you can do about this. Still, we keep trying.
- Because of the complexity, advice from a lawyer experienced in insurance coverage claims is recommended if you receive a denial of life insurance benefits.
WHAT WEILERS LLP CAN DO TO HELP YOU
We have experience reading insurance policies and know insurance law. Our counsel Brian Babcock teaches insurance law at the Bora Laskin Faculty of Law. If you require help dealing with your insurer, give us a call at Weilers LLP. We do not help you for free, but our fees are often a sound investment. If we cannot help you economically, we will let you know. We may be the right lawyers for you.