1. UTMOST GOOD FAITH A PRACTICAL GUIDE TO AVOIDING BAD FAITH CLAIMS
Arie Odinocki
with Derek Francis and Steve Somer

2. UTMOST GOOD FAITH - DEFINITION
Mutual obligation of the insurer and the insured to be honest, fair and reasonable
Putting each other’s interests on par with their own
Utmost Good Faith vs. Bad Faith – what is the difference
Bad Faith – inferred from facts of the case
Conduct that is unreasonable, high-handed, malicious and vindictive

3. Whiten v. Pilot Insurance – Supreme Court of Canada [2002]
Leading bad faith case, resulting in $1 mil. punitive damage award
Exemplifies WHAT NOT TO DO:
Insurer prejudging without adequate investigation or proper evaluation
Failing to assist/advise insured of policy rights
Delayed payments/ “Starving the insured”
Denial of claims

4. INSURER PREJUDGING WITHOUT ADEQUATE INVESTIGATION AND PROPER EVALUATION
KEY CASES: Whiten; Bullock v. Trafalgar Insurance; Kogan v. Chubb Insurance; McQueen v. Echelon
Insurer must:
Assume highlights of your file will be published on the front page of the Star
Treat the insured fairly throughout the claim
Approach the claim expecting it to be legitimate
Undertake prudent and timely investigations
Make decisions based on facts – not innuendo
Not be blinded by first impressions
Give fair interpretation to evidence and policy

5. ALWAYS RETAIN REPUTABLE EXPERTS
General principles for retaining experts:
Identify the need for expert assistance early
Choose the right expert – no “hired guns”
Proper communication with expert – do not withhold information from the expert
Review of the report – do not alter the original but seek explanations if required
Re-evaluate

6. FAILING TO ASSIST THE INSURED
Insurer’s primary function is to assist the insured in making their claim
Provide the insured the following:
explanation of coverage available
explanation of process
timeline
assistance with completion of forms

7. DELAYED PAYMENTS/ “STARVING THE INSURED”
KEY CASES: Ontario Inc. v Non-Marine Underwriters, Lloyd’s of London; Farme Gerald Laplante v. Grenville Patron Mutual
Carry our reasonable and prudent investigations
60 day time limit set out in Condition 12 is not absolute
Do not exploit the insured’s economic vulnerability to extract favorable settlement
Do not delay properly owing payments to gain bargaining leverage
Courts punish starving the insured because the insured is presumed to be in economically and psychologically vulnerable position

8. DENIAL OF CLAIMS KEY CASES: Khazzaka v Commercial Union
Proper denial is supported by credible, complete and impartial evidence and solid understanding of the policy
Recognize that claims can evolve – be open-minded
Insurer has a duty to re-evaluate the evidence throughout the claim and consider new evidence
Your conduct will be judged to a reasonable standard:
you do not have to always be right
You always have to be reasonable

9. DEMONSTRATING GOOD FAITH – PRACTICAL TIPS
You cannot stop the insured from alleging bad faith. However, you can take steps to protect yourself:
Accurately and completely document all conversations with the insured;
Be professional and avoid loose conversation which may be interpreted out of context;
Provide reasonable assistance to the insured as the case may direct;
Respond as promptly as possible to enquiries or correspondence; 
Correspond regularly with the insured, clearly documenting for them steps which have been taken, decisions which have been made regarding the acceptance or denial of the claim, and the reasons for same;
If there is a delay in responding to a claim or inquiry, correspond with the insured, advising of the nature and expected length of delay

10. DEMONSTRATING GOOD FAITH – PRACTICAL TIPS
Obtain as much objective evidence that is available and give it all fair consideration;
When denying a claim, the reasons for the denial should be clearly set out in written correspondence and where necessary or appropriate, the policy and/or statutory provisions should be quoted;
The claims file should be well documented and reflect an ongoing process of evaluating the evidence available at the time and responding to such with reasonable investigative efforts;
The claims file should not only document what is being done, but why. This is necessary because an insurer may have to convince a judge or jury at trial what it was thinking as it implemented its litigation strategy.

11. THANK YOU