Insurer found to have breached duty of utmost good faith by volunteering information from insured’s statement to the police

10. August 2021 0

Insurance law – Automobile insurance – Good faith – Statutory provisions – Damages – Punitive damages – Duties and liabilities of insurer – Actions – Criminal acts

Barata v. Intact Insurance Co., [2021] A.J. No. 736, 2021 ABQB 419, Alberta Court of Queen’s Bench, May 28, 2021, G.S. Dunlop J.

The insured sought damages from her automobile insurer and an employee of the insurer for breach of duties pursuant to the investigation of an automobile collision.

The insured and her husband were in her vehicle when it struck and injured the pedestrian. They stopped their vehicle to speak to the pedestrian’s companions but later left the scene without waiting for police to arrive. That day, the police attended at the insured’s home and arrested the insured’s husband on the assumption that he was the driver.

The insured reported the collision to the insurer and the employee was assigned to investigate the claim. The insured reported in her statement to the employee that she, not her husband, was the driver at the time of the collision. The employee volunteered this information to the police and the police later charged the insured with failing to stop, provide her name and address, and offer assistance to the pedestrian. The insured alleged the insurer and the employee breached duties owed to her by volunteering the information she provided to police.

The Court found that the insurer and its employee did not owe the insured a duty of confidentiality with respect to the information she provided. The Court rejected the insured’s argument that her obligation to provide all available particulars pursuant to statutory condition 3 created a reciprocal duty on the insurer to keep the information she provided confidential.

The Court found that an insurer’s duty to investigate a claim in utmost good faith includes what the insurer does with the information it obtains during that investigation. An insurer may be reasonably justified in disclosing some or all of an insured’s statement to the police, particularly if it is for the purpose of seeking information to assist with the insurer’s investigation of a claim. Disclosure that does not further the insurer’s investigation is not reasonably justified and constitutes a breach of the duty of utmost good faith to an insured.

In this case, the Court concluded that the employee’s disclosure to the police was not reasonably justified as it did not provide further information for the investigation of the plaintiff’s claim. Therefore, the court found that the insurer and its employee breached the duty of utmost good faith to the insured. However, the disclosure did not result in damage to the insured as this was just one source of information for the police to charge the insured. The insured’s husband had also disclosed that the insured was the driver at the time of the collision. The Court declined to award punitive damages to the insured as the employee’s disclosure was not reprehensible conduct and also did not cause the plaintiff harm.

This case was digested by Dominic Wan, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Dominic Wan at [email protected].

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