Law Times

PAGE 4 NEWS January 23, 2012 • Law Times Court rules on insurers' duties to explain benefits BY KENDYL SEBESTA Law Times T he Superior Court of Justice has ruled the Insurance Act and the statutory accident benefits schedule may expand the duties of provincial insur- ance brokers that sell optional benefits but has stopped short of explaining how far those ob- ligations could stretch. "I consider that there was a failure on the part of the de- fendant in this case and in accordance with its standard practice to 'offer' the optional benefit coverage in any mean- ingful way," wrote Superior Court Justice Robert Reid in Zefferino v. Meloche Monnex In- surance on Jan. 9. "As such, the offer that was made, which was RELIABLE TAX EXPERTISE FOR NON-TAX LAWYERS NEW EDITION THE LAWYER'S GUIDE TO INCOME TAX AND GST/HST 2011 DAVID M. SHERMAN, B.A., LL.B, LL.M. Author David M. 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According to the ruling, Nicola Zefferino was injured in a car accident in 2005 and re- ceived $400 in statutory mini- mum income-replacement benefits each week under the policy but claimed that because the company hadn't fully dis- cussed his benefit choices, he was underinsured and would have otherwise taken the $1,000 coverage option. Reid ultimately Zefferino's claim, noting he con- sidered the evidence that dismissed the plaintiff would have opted for additional income-replacement coverage had the company of- fered it to him to not be credible. Reid called that evidence "clearly self-serving" and "not consis- tent with the plaintiff's and his spouse's previous actions." Zefferino, according to Meloche Monnex, had previous- ly declined the additional ben- efits offered to him between 2003 and 2005. The company claimed it was its policy not to repeatedly offer the benefits if the client had previously declined them. But lawyers say that policy and Reid's ruling raise serious questions about what "a proper offer" of optional benefits may include and where it falls on the spectrum of insurance brokers' duty of care. "The case stops short of de- scribing all a broker would need to do to discharge that duty but suggests the broker might need Lou Ferro believes the ruling could lead to changes in the long run. to form a more detailed history of the client to make sure they understand what the optional benefits cover, what they cost, how they might apply to the particular client and their fam- ily, and what the consequences might be if they fail to purchase those benefits," says Daniel Strigberger, a partner at Miller Thomson LLP. If an insurance broker stops short of doing that, Strigberger adds, they may now find them- selves in hot water. "The plain- tiff's case fell apart because on evidence, the judge didn't believe the plaintiff would have bought the optional benefit coverage anyway. But if it had gone the other way, it could have been very costly for the broker." But another insurance lawyer doesn't expect big changes, not- ing that while some insurance companies may revise their poli- cies, similar cases that could lead to a more detailed definition of what a proper offer means will likely be few and far between. "I would anticipate that EFFECTIVELY COLLECT AND PRESENT DNA EVIDENCE DNA: A PRACTICAL GUIDE DAVID ROSE AND DR. LISA GOOS Gain valuable insight into investigating, prosecuting and defending charges involving DNA. This practical guide provides you with authoritative answers to the critical issues, such as how to prepare a DNA warrant and collect a DNA sample, what the role of your expert witness is, and how to effectively present DNA evidence to a judge or jury. Written by two recognized authorities, DNA: A Practical Guide covers the scientific and technical aspects of DNA, as well as the legal issues. 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Price subject to change without notice and subject to applicable taxes. companies who do sell insur- ance products in this particu- lar fashion will, of course, be reviewing their practices to ensure they are communicat- ing with potential customers in a way that gives them the basic types of information about the basic cost and benefit of this product," says Jonathan Wake- lin, an insurance defence litiga- tor at Samis & Co. "However, this does not open the door for claimants to chal- lenge their brokers except in certain narrow circumstances." But Lou Ferro, who repre- sented Zefferino, argues that while the larger effects of the ruling may not be immediate, insurance brokers and clients could see changes in the long run. "It's an interesting case be- cause the judge seems to say the current industry standards on offering these type of ben- efits don't comply with [the schedule] and is a breach of the duty owed to auto policyhold- ers. In my experience, going from $400 a day in this case to $1,000 a day would add up to about 30 cents a day. If some- one had asked, 'Would you pay 35 cents extra a day?' most peo- ple would likely say yes." LT www.lawtimesnews.com

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