Toronto Injury Lawyer Blog
“Thou shall not lie” is the ninth commandment, and it’s a pretty good commandment to abide by. This is reaffirmed at law when before a witness steps on the stand, or provide oral evidence at their examination for discovery; the witness either swears on the bible or affirms to tell the truth and not to lie.
But people are not followed around by Court Reporters and lawyers in their everyday lives. You are not required to swear to tell the truth before you start your day in the morning. Nor are you required to swear to tell the truth when you fill out some form of application. It’s just expected that you fill in the application truthfully, and not lie.
But, what are the consequences for lying on an application which may be relied on in the Courts? That’s a very good question. If often comes up in the form of insurance applications; like for life insurance, short term disability, long term disability or for mortgage insurance.
Often, at the top of these insurance applications, or on the first page there is some form of disclaimer or warning requiring the applicant to be truthful in completing the application, and identifying the consequences for not being truthful. But, few people play close attention to these details which may not be in fine print. The words might be in bold in order to better alert the applicant to the consequences, yet, they still go ignored in many cases because people have a habit of not reading (or not properly reading) standard forms.
The Insurance Act has covered instances requiring applicants not to lie; or not to conceal information from the insurer. It’s called a duty to disclose. The duty to disclose is covered in section 183 of the Insurance Act which states:
Duty to disclose
183 (1) An applicant for insurance and a person whose life is to be insured shall each disclose to the insurer in the application, 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 and is not so disclosed by the other.
Failure to Disclose
(2) Subject to section 184 and subsection (3) of this section, a failure to disclose, or a misrepresentation of, such a fact renders the contract voidable by the insurer.
So, there it is. This is as plain English as you will see in a codified law. The person completing the insurance application (the applicant), shall disclose to the insurer EVERY FACT within the person’s knowledge that is material to the insurance application. If the applicant does not disclose every material fact, or hides material facts; then the contract of insurance is voidable by the insurance company. This means that the insurance company does NOT need to cover the person and treat the situation as if there was no proper policy of insurance in place. It’s like the applicant had no coverage at all, despite the fact their premiums had been paid up to date.
We commonly see these issues arise when it comes to questions about an applicant’s past medical history on their insurance application. The applicant will be required to answer standard form questions whether or not they had any tests, medical diagnoses, or reported any problems to their doctor dealing with A, B or C ailment….
This information is important for an insurance company so that they understand the level of risk involved to insure a person. Take for example a person with no pre existing health issues, compared to a person with chronic heart disease. The person with no pre existing health issues will fall into a lower risk category compared to the person with a history of heart problems. The level of risk will be reflected on the amount being charged in premiums to the insured, along with the amount of insurance offered to the person to cover the risks of insuring them. The greater the health concerns, the greater the risk of insuring that person; the more the insurer will be charge in premiums in order to insure that person.
Sometime people forget that they reported symptoms like chest pain, shortness of breath, etc. to their doctor. Sometimes people forget that blood work and other testing was done. These are honest mistakes. But even these honest mistakes can present as barriers to coverage. Ideally, the applicant just wants to receive insurance benefits without needing to retain a personal injury lawyer and fighting things out in Court.
Other times, people attempt to deliberately conceal this information from the insurance company. The hope is that nobody will find out, so that they can secure lower rates and get insurance in place. But, this ends up to hurt them in the end because the insurer finds out and then voids their policy of insurance. It’s a lose lose situation.
A lot of the time, these claims get denied. A personal injury lawyer has to get involved. And then the case comes down to the Plaintiff’s credibility. Was this an honest mistake by the Plaintiff who simply forgot about these tests or complaints which were so trivial at the time that they didn’t register at the time of completing the application of insurance? Is this a believable story which stands up to scrutiny? Or, is this a situation where the medical tests and complaints to the doctor were so frequent and intrusive that they were impossible to ignore or to forget such that it raises issues with respect to the Plaintiff’s credibility and motivation for not disclosing it to the insurance company. It’s very hard for a Judge to put themselves into the Plaintiff’s frame of mind when completing an application for insurance. But, a Judge will be able to infer that a reasonable person would or would not remember about these things given the frequency and severity of the complaints or medical treatment/testing. It would be hard for a person to forget their open heart surgery which left them hospitalized for 2 weeks, followed by extensive rehabilitation vs. a routine blood test.
