Insurance Disputes: Automobile Insurer Refuses To Pay for “Total Loss”?

Total Loss Claims in Ontario

What is the purpose of insurance? This question can be answered with two simple words: “safety net”. We get insurance to feel safe. Contracts of insurance are, by definition, contracts for “peace of mind”. This concept applies equally to automobile insurance. When you are in an accident and your car has been deemed a “total loss” (a write off), you expect your insurance company to pay you for your vehicle.

Unfortunately, many insurers do not pay. They may tell you that they are “investigating” the loss, or that they have more questions, or that they need more documents, etc. This process can, and often does drag out for months and months, forcing people to eventually come to us for help.

Total Loss Insurance Dispute: Taking Action

What most people do not know is that if an insurer does not pay a claim they ought to pay, an insured can sue them for breach of contract. After all, as an insured, you paid premiums for your insurance policy. That policy is a binding contract on you as well as on your insurance company. Therefore, if your insurer refuses to honour its obligations under the policy, you have legal recourse.

It is extremely important to realize when dealing with a property damage claim (i.e. loss of a vehicle) that an insured only has one (1) year from the date of the accident to sue his or her insurer for property damage. Unlike with most claims in Ontario, where you have two (2) years to start a lawsuit, you only have one (1) year to sue your insurer for property damage. It does not matter that the insurer told you they were investigating the loss, or that you were promised this or that. Once the one (1) year passes the insurer is legally protected and there is virtually nothing you can do if they refuse to pay.

Remember also that your insurance policy obligates you cooperate with your insurance company. This means that you will need to provide a properly completed Proof of Loss, as well as certain information and documentation (such as a police report) that would allow the insurance company to complete its investigation of the loss. However, keep in mind that the insurer is not entitled to absolutely everything they ask for. They must be reasonable.

Practical Advice For When Your Automobile Insurer Refuses To Pay

• Contact your insurer as soon as possible after accident and notify them of any injuries and property damage.
• Provide your insurer with a properly completed Proof of Loss form and document your interaction with the adjuster(s), particularly if the investigation process seems to be dragging.
• If your claim is not resolved within a reasonable time, consult a lawyer.
• If the insurer insinuates that they are “further investigating” the loss due to “a potential breach of the policy”, consult a lawyer.

Contact your insurer as soon as possible after accident and notify them of any injuries and property damage. Provide your insurer with a properly completed Proof of Loss form and document your interaction with the adjuster(s), particularly if the investigation process seems to be dragging. If your claim is not resolved within a reasonable time, consult a lawyer. If the insurer insinuates that they are “further investigating” the loss due to “a potential breach of the policy”, consult a lawyer. Above all, make sure you do not pass the one (1) year limitation mark. Once you pass it, your legal options are severely restricted and you may not be able to recover for your loss of property.