Don't Delay When Claiming for Life Insurance Benefits

The recent decision in Dicaro Estate v. Manufactures Life Insurance Company considered an estate trustee's ability bring a claim for insurance proceeds more than ten years after the deceased's death.  

The deceased died in 1999 due to complications relating to liver disease and after undergoing a biopsy.  He had worked for Molson Breweries for almost 25 years and had various insurance policies issued by Manulife, the defendant in the proceeding. 

After the deceased’s death, his widow (who was the plaintiff in the action) applied for and received the basic benefit claim of $45,000.  On the proof of claim form filed, the plaintiff specified that the death was NOT accidental (and, accordingly, no accident/dismemberment benefits were paid). 

In 2000, the plaintiff commenced a medical malpractice claim against the hospital and medical practitioners involved in the deceased’s care at the time of his death.  The decision was released in 2003.  It was during that proceeding that the plaintiff later claimed she first learned that the deceased’s death was caused by an ‘accidental poke’ during the biopsy.  As a result, in 2007, the plaintiff filed a claim with the defendant for accident benefits.  In 2008, Manulife denied the claim due to lateness as well as non-compliance with the proof of claim provisions in the insurance contract. 

The plaintiff commenced an action against the defendant in 2010 seeking the accidental death benefits under the deceased’s various insurance policies.  The defendant then moved for summary judgment seeking to have the plaintiff’s claim dismissed arguing that there was no genuine issue for trial. 

Justice Chapnik considered the various limitation periods that could possibly apply – under the policy itself as well as (the now revoked) s. 206(1) of the Insurance Act and s. 34(5) of the Limitations Act.  She found that no matter what permutation of the limitation periods was applied, the plaintiff was clearly out of time for bringing the claim. 

The plaintiff also relied on s. 96(1) of the Courts of Justice Act, arguing that principles of fairness and equity should be applied in the circumstances.  However, Chapnik J. found that this would not be appropriate in the given case given the plaintiff’s non-compliance with limitations imposed by statute. 

Accordingly, she granted the defendant’s motion for summary judgment and dismissed the plaintiff’s claim.    

Man Who Killed Wife Is Denied Her Life Insurance

There’s a common law rule that if you wrongfully kill someone and you’re the beneficiary of their life insurance policy, you don’t get the proceeds.  The recent decision in Dhingra v. Dhingra considers whether this principle applies if the prospective beneficiary is found not criminally responsible because of a mental disorder. 

The applicant commenced an application seeking insurance proceeds of $50,000 from the policy of his deceased ex-wife.   The applicant had been charged with second-degree murder after bludgeoning and stabbing his ex-wife (who was the insured life on the policy) to death – but was found not criminally responsible by reason of mental disorder.  The deceased’s executor (who was her son with the applicant) opposed the payment of the proceeds to the applicant, arguing that they should be paid to the estate.

The executor argued that the applicant was disentitled to the insurance proceeds by virtue of the “public policy rule,” which provides that an individual who wrongfully kills another may not profit from the act of killing (a very helpful discussion of the pubic policy rule can be found in the Ontario Court of Appeal’s decision in Oldfield vs. Transamerica Life Insurance Company of Canada). 

The executor’s position was that, in this case, it was clear that the applicant had committed murder and, on the basis of the public policy rule, it was clear that the applicant ought to be barred from receiving property he otherwise would have acquired as a result of the death. 

The applicant argued that he was the only one named as a beneficiary on the policy and, as such, he was the only one entitled to make a claim to the proceeds.  He also pointed to the fact that the insurance company did not oppose payment to him.  Additionally, the applicant argued that given the finding of no criminal responsibility in regard to the death of his ex-wife, the public policy rule did not apply to this case.

Justice Pollak disagreed with the applicant.  She found that notwithstanding that the applicant had been found not criminally responsible for killing his ex-wife, it was obvious he had physically committed the crime. She further noted that there was no judicial support for the contention that for the public policy rule to apply the court was required to find an intent to commit a crime.  Accordingly, she found that the public policy rule applied so as to disentitle the applicant to the insurance proceeds.  According to this article from the Toronto Star, the applicant intends to appeal the ruling.   

Worried About Being an Executor? Then Buy Insurance!

I recently came across the website for ERAssure, an Ontario-based company which bills itself as the “only errors and omissions insurance available for estate trustees.”  The purpose of the insurance is to insure executors from personal liability and legal fees that might arise as a result of their negligent administration of an estate.

The coverage territory in Canada and the insurance will cover estates with a value of up to $5 million.  The premiums for the policy will depend on the size of the estate and the extent of the coverage.  While the policy will cover most negligent acts by an executor, there are limits – fraudulent, dishonest, and malicious acts are excluded from coverage. 

The policy is available for estates with more than one executor.  However, it must cover all of them – and it will not cover cross-claims between executors.  

It’s notable that an executor can’t purchase a policy directly.  Instead, law firms have to register with ERAssure and then apply for coverage for an executor client.  However, the website specifies that the company waives any right to subrogation against the estate solicitor, provided that the lawyer wasn’t involved in fraud or disciplined by the law society in relation to the matter and cooperates in the investigation of the claim.  I would be interested to know many lawyers have registered with this service.

I noticed that in a couple of places on the ERAssure website, it says that executors can usually pay for a policy of this nature from the estate assets. Personally, I would warn an executor against doing that.  Given the purpose of the policy is to insure the executor from personal liability for negligence, I think it would be difficult to justify why it is properly an expense of the estate.