“The devil is in the details” is an old saying that applies to many areas of life, including the law. In many situations, legal disputes boil down to one party’s interpretation of a single line or word in a contract. Estate litigation is not exempt from such occurrences. Take for example a recent decision from the Ontario Superior Court of Justice which looked at whether a deceased’s individuals incorrect answers in a phone interview with his insurance company voided him from coverage.

Incorrect answers when purchasing travel insurance

The deceased was preparing to travel to Florida and telephone the insurance company from his home in Toronto in order to renew his travel insurance policy. He talked to a representative for 27 minutes, during which time he answered “no” to a series of questions about prescribed medications and pre-existing health conditions. Following the conversation, the travel policy was issued and the deceased traveled to Florida.

The deceased was 84-years-old at the time and was unexpectedly hospitalized, incurring a bill of $134,479 (USD). When he attempted to claim the hospital expenses from the insurance company, their claim was denied on the grounds that the answers he provided on the telephone conversation were not correct. He, unfortunately, passed away before he could pursue the claim any further, so his estate took up the matter.

The language in the travel insurance policy

Statutory Condition 2 in the policy stated,

“No statement made by the insured or person insured at the time of application for this contract shall be used in defence of a claim under or to avoid this contract unless it is contained in the application or any other written statements or answers furnished as evidence of insurability. [emphasis added]”

The estate argued that the words “…application or any other written statements” means that only written statements could disqualify someone from coverage, and since the deceased applied for insurance over the phone, he did not write anything misleading or incorrect (even if the answers were incorrect or misleading when delivered orally.

The insurance company, meanwhile, argued that the essence of the condition does not actually require a written statement. Since they accept applications over the telephone, as do most insurance companies, they argued the condition should rightfully apply to those conversations as well.

The importance of good faith when entering a contract

The court stated that both parties submitted detailed and extensive submissions, but that the matter could be decided in a more direct and sensible fashion.

The court cited The Insurance Act, which states,

“Duty to disclose

  1. (1) An applicant for insurance … shall disclose to the insurer in anyapplication,on a medical examination, if any, and in any written statements or answers furnished as evidence of insurability, every fact within the person’s knowledge that is material to the insurance …

Failure to disclose, general

(2) … [a] failure to disclose, or a misrepresentation of, such a fact renders a contract voidable by the insurer.”

It also came out that while the deceased did not fill out an application, the representative from the insurance company did, and the application was both emailed and mailed to the deceased for him to review and provide any corrections.

The court determined that although the insurance company’s argument that “application” means over the phone as well as written was not correct, their policy to mail the application, filled out, back to the applicant satisfies the “written” requirement set out in the contract. As a result, the estate’s claim was denied.

If you have been appointed an executor, the estate lawyers at Derfel Estate Law can advise and guide you on all aspects of estate administration, including matters of litigation. Call us at 416-847-3580 or contact us online to schedule a consultation.