What BC Residents Need to Know About Challenging Insurance Claim Denials

Insurance denials can be frustrating, especially when policyholders are left with more questions than answers after a claim is rejected. In this episode of FH&P Lawyers’ Law Talk podcast, hosts Clay Williams and Tanvir Gill are joined by Darren Kautz, head of litigation, to discuss common insurance denial scenarios and the legal avenues available to fight back. 

From disability and travel insurance disputes to homeowner warranty claims and life insurance policy challenges, Darren shares real-world cases and insights gained over a decade of fighting for clients against big insurance companies. This episode is a must-listen for anyone navigating the complexities of insurance claims and denials. Tune in for expert advice on how to protect your rights and hold insurers accountable.

Clay: Welcome to another edition of FH&P Lawyers Law Talk. I'm Clay Williams. I'm a partner here at FH&P, together with one of our newly minted partners, Tanvir Gill. Also with us today is Darren Kautz. Welcome, Darren! Darren is the head of our litigation department.

So, just to give a little background there, lawyers often organize themselves into two main types of lawyers. One is solicitors, and they do more like, you know, documentation and that happy lawyer stuff. Tanvir is a solicitor, so contracts and deals and that type of thing. And litigators are, in the old days, they were called barristers. Barristers, are they unhappy? Unhappy lawyers?

Tanvir: They're unhappy or fighting for the unhappy folks going to court.

Clay: So, today, what we're going to talk about is something that the litigation department sees a lot of, I guess, which is insurance denials.

Darren: That's right.

Clay: And you guys handle claims directly against insurance companies who have said, "No, we're not going to pay that out."

Darren: That's right. Yeah. And it's near and dear to my heart. I actually quite enjoy disputing these and fighting with insurance companies. Yeah, it's been part of my practice for over a decade now.

The Common Types of Insurance Denials

Clay: And, you know, I was thinking about this when you said you wanted to talk about it, and oh, I mean, insurance, it's everywhere. I mean, it just permeates our life, our existence, doesn't it? And, oh, that's fair. I mean, there are so many different types of insurers. You know, the ones I've dealt with, just off the top of my head, fighting disability denials, disability benefits. And, travel insurance, I remember doing claims for people who are off on holidays and have a heart attack or some medical emergency. And the hospital bills weren't covered. I just remember doing one where the insurance company dug out this poor lady's records for all of her pre-existing medical conditions, and even though she hadn't been diagnosed with a condition, they said she had a pre-existing condition based on clinical records. I thought it was disgusting behaviour. 

Another one we're dealing with all the time now is the homeowner protection, homeowner warranty, and new home warranty. And, you know, that's in the context of when you buy a new house or you build a house, the builder must provide a homeowner policy now, and that is issued by an insurance company, who may say, "No, that's not a structural issue, it may or may not collapse." So those types of things. And I know you've dealt with a lot of this.

Darren: For sure. I mean, you know, there are life insurance policy disputes, travel insurance policies disputes. I think you mentioned mortgage insurance policy disputes, and, mortgage insurance policy disputes can be a couple of different things whereby, you know, you can have a mortgage insurance that says, "Old Clay here, we put life insurance on him to cover the mortgage."

Tanvir:  This is why he always buys travel insurance now. 

Clay: That's right. 

Tanvir: Well, it's because he is old and the risk is just too high! 

Clay: Yes, I just haven’t been cut off yet.

Darren:  But we get light mortgage insurance that should Clay pass away, the mortgage will be covered. And you know, that is extremely common nowadays because people's mortgages have been ballooning over the years.

You know, there's no longer a $50,000 mortgage anymore. You have, you know, four or $500,000 mortgages. It's— 

Clay: Big, big bucks now.

Darren: Substantial.

Clay: I think we all have more life insurance on each other now.

Darren: We do.

Clay: So, yeah. It's just everywhere you see and you're right about, everything's so expensive now. I mean, you get hurt in a foreign country, big bucks, mortgage, big bucks. So yeah, absolutely. If Tanvir were to pass away, you know, and I think we've got a $50,000 policy on you. And a $2 million policy on Darren. But hey, who's judging?

Tanvir: My husband has a $1.4 million insurance policy on me.

Clay: You better be careful.

Tanvir: I should be, especially when he says, "Let's go on vacation, babe." 

Darren: Better check the country! The rip tide was crazy that day.

Tanvir: Get on the helicopter right now! Geez.

Clay: And it's expensive. Insurance is expensive and it's getting more expensive. And, you know, we're all told, well, you know, it's all these natural disasters. It's due to climate change and all that, but you pay a lot and often you don't get a lot. So, let's talk about what happens after a loss. There's a loss, and, you know, I guess, denial. Well, I kind of wanted to talk a little bit about the broker because I have a lot of respect for some of the brokers we deal with in helping our clients navigate through trying to deal with the underwriter. And I do—people appreciate, I don’t know that there’s a difference between the underwriter, the insurance company, and the people who sell them that insurance. And, you know, they can be very, very helpful.

Darren: They can, but they can also be liable potentially as well.

Clay: I was talking on both sides of my mouth there, wasn’t I?

Broker vs. Underwriter: Who’s Responsible?

Darren: That's right. So, you know, at the same point, your broker still owes you a duty. You come in there and you sit down and you say, "Look, I want insurance on my home." And the insurance broker says, "Okay, tell me about your home." And you tell them about your home. And then they sell you a policy that is underwritten by the insurance company itself. If the broker, though, unfortunately fails to put aspects that you told them about on the policy and you're not insured then by the underwriter and something bad happens. As an example, and this is something that I've dealt with historically, are wood stoves. So, we're in British Columbia. I have a wood stove. I love it. Wood heat's great, but it is a liability in your home. And insurance companies will charge you a premium for having wood heat in your home. Now—

Clay: I don’t think so. I think only if it’s a primary source.

Darren: Even if it's secondary, you're still paying more.

Tanvir: What about a pool that's more relevant in Kelowna? Would your insurance company be charging higher?

Darren: Absolutely, because it's more risk. Anything that adds risk to your home or your property is going to increase your policy premiums. So, as an example with wood stoves, you know, if your broker, you tell him, "I have a wood fireplace in my house," and I show a picture of it, and he unfortunately doesn’t check off on the policy that you have a wood fireplace in there, and then your house burns down because of the wood fireplace. Your policy will be denied. You're in a difficult position where you're going to have to end up coming to me and we are going to have to sue the broker. We're going to have to sue the insurance company because they denied your policy.

Clay: First-party and third-party claims.

Darren: That's right. 

Clay: So, you're suing the insurance company directly, a first-party claim between the broker for negligence, and presumably that broker has insurance to cover that loss? Okay. So, tell us some more stories about the things you've been doing.

Darren: Sure. Yeah. So again, I like this area of law. It’s interesting and it's becoming more and more prevalent, I find, as our population ages. So, as we get more and more elderly people in, they have life insurance policies, and life insurance policies usually cap out at a certain age. So, some of them are 65, some of them 70, you know, there's always a maximum cap on those life insurance policies. Now, what happens when you get to the point of dementia and you perhaps fail to pay your premiums for a few months? Can the insurance company deny your claim then if you pass away within that period? 

The answer's complicated, so it will depend on facts. It will depend on what the insurance company or brokerage did by notifying you or the family. Did they check in on you? Technically, again, the insurance companies every year are supposed to update you on your policy. So, if your mental health has changed, if something's happened, but I have been seeing a lot of dementia cases where people have actually, elderly people, have missed premium payments and passed away. Then their claim is denied for their insurance policy. It’s a real problem nowadays.

Clay: It just reminds me of what we did last week on estate litigation and how important it is to write down your assets, I guess, insurance policies would be really important too, you know? So that's another thing you'd better communicate with your kids, but anyway.

Clay: So, okay, well, that makes a lot of sense. And to me, now, disability insurance, I mean, I’m more familiar with that. Right? And, boy, those can be litigated. And those policies have been written very intelligently to favour the insurance company. They've been around a long time, and they’ve got good lawyers defending them.

Common Policy Exclusions and How to Avoid Them

Darren: So, what are some ways that you've been able to get around perhaps some of the contractual obligations?

Clay: Well, part of it is the evidence that you're presenting. And so something that you can often use is, you know, they may have— the insurance company may go and send your client to a doctor who says, "Oh no, this person isn't disabled from everything. This person can do this or that." And so the disability benefits will stop. 

But if you use something like an occupational doctor, I’ve found they can look at the totality of the disabilities, you know, then oftentimes you can get that over the hump. That way, you know, is one way to do it, but that requires some planning, some skill connections. And so that’s something that we can certainly help you with.

Darren: Absolutely. Yeah. You know, and again, our firm is a full-service firm. We can help you with a gambit of everything from solicitor work all the way to interpreting contracts, all the way to taking it to court if they deny a claim.

Clay: You know, these homeowner protection claims now, or homeowner, the new home warranty claims. We've seen a lot of that too. And a lot of these policies are strictly interpreted, and there are time limits to bring these claims. So I wanted to bring up limitation acts and limitation provisions, which are in the contracts and they're also in the legislation. So, you know, you've got really strict reporting requirements. But don't give up. Just because you've been denied doesn’t mean that it's something that we can't help with.

What to Do If Your Claim Is Denied

Darren: No, I encourage everyone, if you've been denied, it is worth coming in to see us. You know, we will happily walk you through your factual case, happily walk you through whether or not we think there’s a chance. And if we get to that point, I always encourage clients, like I have a team of litigators here, we will say, look, come in and we'll do a full memo for you, to give you a breakdown of the interpretation of the contract, your specific factual situation, the law, and then let you know what's happening after that. 

Even then, I still sometimes will shoot a fairly aggressive letter across to the insurance company saying, we're going to proceed to see if they'll blink because insurance companies like to deny claims. It's how they keep their volume and their money high by not paying out all of these different claims.

Clay: I remember reading a case, there's a quote, something along the lines of, "An insurance company doesn't make money by paying out its claims."

Darren: Nope. Yeah, it’s true. And again, I’m finding over the last few years as our population ages, you’re seeing it more and more where you know, you've just lost your loved one. You don’t want to fight with anyone in the insurance companies, and you just want it all to be concluded. So they're denying these claims, and then no one’s doing anything about it. And for me, that’s a problem because I fundamentally want to make sure that our clients are protected.

Clay: Yeah. You know, another one I'm thinking of is, you know, floods and climate change and, you know, things like fires and all these crazy things that are happening. I think that’s driving up the cost of insurance. But it’s also, I think, forcing some of the insurance companies to get more aggressive in their denials.

Darren: Absolutely. And so, don’t abandon hope. You know, there’s definitely people like Darren, who can take these guys to task.

Darren: That’s right. Yeah. We’re here to help.

Clay: Alright, so again, if you’ve got any questions, please leave them in the comment section and we will endeavour to answer them. Till next time. Thank you, Darren, and thank you, Tanvir.

When facing an insurance denial, it’s easy to feel like you're up against an impossible challenge. However, with the right legal support, you can take action and hold insurers accountable. Whether you're dealing with disability claims, travel insurance disputes, or homeowner warranty issues, FH&P Lawyers is here to guide you through the process. Reach out to our team today to protect your interests and ensure that you're treated fairly by the insurance companies.

Disclaimer: This material is provided for informational purposes only and should not be construed as legal advice on any subject matter. Consult with a qualified lawyer for advice on specific legal issues.