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The Ontario Superior Court recently heard a case involving a legal action initiated against the insurance company, TD Meloche Monnex, where the plaintiff, Nicola Zefferino argued that he would have purchased increased optional benefits if “they had been better explained to him”.
The Court found that the direct writer of the policy (the underwriter) breached its duty of care in offering optional benefits to its consumer. Mr. Zefferino was involved in a car accident in May 2007. On three separate occasions between 2003-2004, call centre representatives of Meloche Monnex called him and offered optional benefits that would have increased his income replacement benefits, if he were involved in a collision, from the statutory minimum income from $400 weekly to $600, $800, or $1000 per week.
Each time, the offer was refused by Mr. Zefferino, and the call centre representatives noted in the system, “not needed”.
Mr. Zefferino, however felt, that the product was not explained properly to him and the court did find that the insurer failed to meet the standard required by the Statutory Accident Benefits Schedule in “offering” the optional benefits. There was no evidence that Mr. Zefferino understand what the optional coverage meant, its cost , how it could apply to his circumstances, what the consequences could be if he failed to secure the additional coverage etc.
The customer needs to be able to make an informed decision about optional coverage. It boils down to the standard of care.
The judge found that the defendant had a duty of care to explain and offer optional benefits to the insured. The claim, however was dismissed because there was no proof on the plaintiff’s part that they actually would have purchased the optional benefits.
The court found, “The plaintiff and his spouse purchased insurance from four other insurance companies during the 10 years before the relationship with [Meloche Monnex] began…” “The choice of securing insurance through the defendant was based on price.”
At paragraph 42 of the decision. R.B. Reid, J. states:
” As a result, I consider that the plaintiff’s evidence that he would have secured additional income replacement benefit coverage had he understood what was being offered not to be credible. Not only is it clearly self-serving, but it is not consistent with the plaintiff’s and his spouse’s previous actions. No evidence was provided by Mrs. Zefferino, even though it may well have been relevant. In my view, the plaintiff (or his spouse) chose to purchase the least expensive form of insurance available. He cannot now change that bargain. As such, he fails in the third issue necessary to establish a successful claim in negligence in that he has not shown on a balance of probabilities the necessary causal connection between the defendant’s breach of duty and his loss. “
The full decision can be found here.
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