Even a small white lie can have serious consequences when it comes to insurance applications and claims. If you’re going through the claims process, consider seeking guidance from Calgary insurance lawyers to help you present your case clearly and accurately, without overstating details or letting emotions lead to misstatements.
Providing false or misleading information can result in significant legal consequences. Alberta courts have consistently taken a strict stance against dishonest claims in the insurance context, so be careful and truthful in every statement you make.
The Insurance Act of Alberta
The Insurance Act outlines the consequences of misrepresentation and fraud. Under Section 554 of Alberta’s Insurance Act, a policyholder’s claim may be considered invalid in any of the following situations:
The insured intentionally made a false statement in relation to a claim.
The applicant provided false details about the automobile that negatively affected the insurer, or knowingly misrepresented or failed to disclose required information in the application.
The insured violated a term of the policy or engaged in fraudulent conduct.
Claim denied? Seek the help of our Calgary insurance lawyers at Sidhu Personal Injury Lawyers, who can assist you with filing your claim or challenging a denial.
The Consequences of Lying
People sometimes lie during a car accident claim for a mix of emotional, financial, and psychological reasons.
Although the Insurance law does not explicitly define “fraud” or “false statements,” courts have developed consistent interpretations over time. Fraud occurs when a person knowingly misrepresents or hides a material fact to cause another party to act to their disadvantage. Likewise, a false statement is one that is untrue and made deliberately with the intent to mislead.
Lying on an insurance application or providing false information during a claim can amount to fraud. Insurance fraud is a criminal offence that can carry significant penalties if proven.
Even if no criminal charges are filed, an insurer may still deny coverage based on inaccurate, misleading, or incomplete information. A denied claim can lead to major financial strain, especially when the compensation you were relying on is no longer available due to an omission or misstatement.
Most insurance industry policies include provisions that allow the insurer to void coverage if the policyholder has not been truthful. Even if the policy itself remains in force, the insurer may refuse to pay any claims once it discovers false information in the application or claim.
For these reasons, it’s essential to be fully honest when applying for insurance and when submitting a claim. Insurance companies carefully review applications and claims for inconsistencies, and even a minor error can be used as grounds to deny coverage.
Example Case of False Information
In Abbas v. Esurance Insurance Company of Canada, the Alberta Court of Appeal described the case as an important insurance decision. It reaffirmed a long-standing legal principle that fraud or intentional dishonesty in an insurance claim can lead to the loss of all coverage under the policy.
Background of the Case
Abbas was insured under an Alberta auto policy with additional coverage for underinsured motorists. After a car accident, he claimed accident benefits and later sought further compensation under the additional coverage. During the insurer’s investigation, it was discovered that Abbas had provided false employment information to support his income replacement claim.
Court Decisions
At first, a lower court sided with Abbas, finding it unfair to deny unrelated benefits. However, this was later overturned on appeal, with the higher court ruling in favour of the insurance team and confirming that all coverage could be denied due to the false statement.
The Court of Appeal ultimately agreed, upholding the decision and dismissing Abbas’s appeal.
The Court relied on long-standing common law and earlier Alberta case law, including Swan Hills Emporium & Lumber Co. v. Royal General Insurance Co., which held that the insurance group can deny all claims if an insured makes a deliberate false statement in a claim.
The Court emphasized that Alberta’s Insurance Act reflects this principle: any intentional false statement connected to a claim can result in forfeiture of all related benefits under the same policy and loss event.
How to Avoid Misrepresentation When Dealing with Your Insurance Company
Misrepresentation in insurance doesn’t start as intentional fraud; it can begin with small inaccuracies, unclear memories, or emotional reactions after an accident. The best way to protect yourself is to focus on accuracy, clarity, and documentation from the very beginning.
- Start by being completely honest in your application and throughout any claim. Even details that seem minor, such as prior damage, previous claims, or changes in your circumstances, should be disclosed if they are relevant. Omitting information can create inconsistencies later that may be interpreted as dishonesty.
- When an accident happens, stick strictly to the facts. Describe what you personally saw, did, or experienced, and avoid guessing or assuming details about speed, fault, or the other party’s actions. If you are unsure about something, it is better to say you do not know than to fill in gaps with speculation.
- Take photos of the scene, vehicle damage, and any injuries. Keep copies of medical reports, repair estimates, and all communication with the insurer. Clear records reduce the risk of confusion or unintentional contradictions in your statement.
- Be cautious with emotional statements. After an accident, stress and frustration can lead people to exaggerate injuries or damages. Try to separate how you feel from what you can objectively confirm.
- If you are asked questions you do not fully understand, request clarification before answering. Insurance forms and adjuster interviews can include technical language, and misunderstandings can easily lead to inaccurate responses.
Consider searching for law firms with extensive experience in complex situations. Speaking with injury lawyers Calgary can help you gather accurate and consistent information, especially when claims involve serious injuries like casualty claims, coverage disputes over fault, or potential insurance coverage issues.
Experienced lawyers can guide you through different aspects of the claims process by offering knowledgeable representation that protects your interests while helping you avoid costly mistakes.
Many law firms in Calgary provide services that include reviewing your statements, advising on mediation or arbitration options, and helping you understand the range of possible outcomes and costs involved. With the right legal support, you can develop an approach to your claim, resolve disputes more efficiently, and strive for a fair result without unnecessary complications.
What If You Didn’t Lie but Your Insurance Claim Is Still Denied?
Didn’t lie, but still got denied? Representing insurers in British Columbia may have several reasons for rejecting a claim, and if that happens, here’s what you can do next.
Review Denial Letter
The insurance defence team are required to explain why a claim was rejected, and this explanation is the starting point for understanding whether the issue is missing documentation, an exclusion in the policy, or a dispute over facts.
Compare The Insurer’s Reasons With Your Actual Policy Wording
Insurance policies can be detailed and technical, but see whether the insurer’s decision truly aligns with what is written in the contract. Sometimes denials are based on a narrow interpretation of coverage that can be challenged.
If something is missing or unclear, gather additional evidence. This may include:
- Photos
- Repair estimates
- Police reports
- Witness statements
After that, contact the insurance company to request clarification and submit any additional information. Many insurers have an internal appeal or reconsideration process, and providing stronger supporting evidence at this stage can resolve the issue without further escalation.
Keep records of all communication – emails, letters, and notes from phone calls.
Get Yourself an Experience Insurance Lawyer
If the insurer still refuses to pay after review, consider escalating the matter. This may involve filing a formal complaint with the insurer’s dispute resolution team or a relevant regulatory body.
In more complex or high-value cases, getting legal advice from a Calgary insurance lawyer can help you assess whether the denial is reasonable and what legal options are available.
Contact Sidhu Personal Injury Lawyers Calgary for Insurance Claims
Keep things simple after an accident so you can focus on your recovery instead of paperwork or disputes with your insurance company. Let our personal injury lawyers in Calgary handle your claim or case for you. Sidhu lawyers will take care of the negotiations and deal with the insurer on your behalf so you can concentrate on resting and healing. Our focus is on local clients only; we cannot represent international insurers.
We work on a contingency fee basis, which means you don’t pay upfront legal fees. Payment is only required if we successfully resolve your case or secure compensation for your claim.
For many years, our firm have the knowledge on how insurers approach claims from a defence perspective, including insurance defence strategies and the preparation of coverage opinions. This insight helps us develop strategies for assessing risk and responding to claims.
Frequently Asked Questions
What triggers a claim to investigation?
Common triggers include inconsistent or conflicting statements, missing or weak documentation, unusually high claim amounts, or delays in reporting the incident. Investigations by the insurance litigation team may also be started if there is a frequent claiming history, suspicious timing (such as shortly after a policy begins), or other factors that don’t clearly match the reported loss.
How common is dishonesty in insurance claims?
A TD Insurance survey found that about one-fifth of Canadians admitted to either lying on an insurance application or omitting important information when completing it. While not every inaccuracy is intentional fraud, even small misrepresentations can create serious issues later in the claims process.
Are there situations where a false statement does not invalidate an insurance claim?
Courts have recognized an exception for so-called “collateral lies,” which are false statements that have no material connection to the actual claim. For example, lying about being with a wife instead of a mistress would not affect whether items were actually stolen from a vehicle. In such cases, the lie is seen as unrelated to the core validity of the claim and does not necessarily void coverage.
Is insurance fraud also common in corporate or commercial settings?
Yes, insurance fraud can also occur in business contexts, particularly in claims involving commercial general liability or professional liability policies. In more serious cases, these issues may escalate into commercial litigation or even corporate and commercial litigation, especially when disputes involve significant financial losses. Fraud in this setting can include misrepresentation by companies, vendor overbilling, or staged incidents, and may also intersect with conflicts like shareholder disputes or partnership disputes.
