Contra Proferentem in Canada and Your Insurance Claim Denial


By Sarando Matheos

When you are disabled due to an injury or an illness, the last thing you should have to deal with is a battle with an insurance company over the interpretation of complex contractual terms to get your benefits.

For example, imagine suffering a cardiac arrest, being hospitalized, and becoming disabled from working only to be told by the insurer that “heart attacks” are covered but “cardiac arrests” are not. Unfortunately, these circumstances are all too common.

A news story regarding a family man comes to mind. Mr. (name) was a fit man in his mid-30s who suffered a cardiac arrest. He was placed on life support for four days and spent nearly a month in hospital. Following his release from hospital, he was disabled from his occupation as a mechanic because of ongoing issues with his left arm that arose following a surgical implant of a defibrillator.

When he applied for critical illness coverage through his employment’s group coverage carrier, he was denied. The plan purported to treat “heart attacks” differently than “cardiac arrests.”

The insurance company took the position that, while the insured’s heart stopped, it was not caused by a “heart attack”. The insurer defined “heart attack” as the heart stopping due to a blockage. Since the insured’s heart stopped for an inexplicable reason and not due to a blockage, he was deemed not covered. However, the medical community would describe what occurred here as a heart attack.

What is Contra Proferentem?

Contra proferentem means that where a term is ambiguous, the preferred meaning should be the one that works against the interests of the party who provided the wording. In the insurance context, it’s the insurer who is responsible for drafting standard form insurance contracts. Courts acknowledge that people entering insurance contracts (including disability insurance contracts) have no negotiating power over the terms of these contracts. They accept the terms or they don’t get coverage. Courts also assume that the drafters of these documents are well aware of any limitations or ambiguities and should not be allowed to take unfair advantage of this knowledge. Similarly, if an insurer did not choose its words carefully to avoid misunderstandings, it should not be allowed to benefit from that lack of care.

So, if the normal rules of contract interpretation do not clarify which interpretation was intended by the parties, the courts may apply contra proferentem to break the tie. Some exceptions may apply if the dispute involves an argument over coverage between two insurance companies.

We have resolved many cases favourably for our clients where we have applied this legal concept. You only have a limited time to make an appeal and seek legal action. Contact our Insurance Denial lawyers today at 604.581.7001 to book your free initial consultation.

Read more on 5 additional reasons why your disability claim (could have) been denied.

Don’t Automatically Assume the Insurer’s Interpretation is Correct

An insurer will often deny a claim based on its interpretation of the terms of the policy. Many people simply accept the insurer’s interpretation because, after all, they are the ones administering the policy, and they are assumed to know best. However, it is imperative to review the master policy that sets out the terms of the contract. If there is another, equally compelling interpretation that would cause benefits to be paid, that is the interpretation that should prevail. Further, if there are two equally compelling interpretations, the legal concept of contra proferentem has been used as a tie breaker.

Read more on reasons why long-term disability claims are often denied.

When your insurance claim is denied, seek legal advice from a lawyer that has specific expertise in insurance matters. It may make the difference between getting paid or getting nothing.

At McQuarrie, we have over 100 years of combined legal experience dedicated to litigating insurance claims, including denials of short and long-term disability benefits, life insurance and critical illness claims. If your claim has been denied, contact us and our lawyers can offer guidance on your options and how to resolve your situation efficiently.

If you have a question about a disability claim denial, call us at 604-581-7001 for a free, no-obligation consultation.


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