People should know remedies available to them says founding partner of personal injury law firm
This article was produced in partnership with Singer Kwinter Personal Injury Lawyers.
Mallory Hendry of Canadian Lawyer sat down with Alf Kwinter, founding partner of Singer Kwinter Personal Injury Lawyers, to discuss the ins and outs of insurance claims and what he sees again and again in his practice.
When Alf Kwinter’s clients lost their home to a fire, their insurance company talked them into hiring one of its preferred contractors. But the contractor was consistently doing a poor job and Kwinter’s client was consistently pointing it out — leading to the contractor walking off the job, leaving the house half-finished and exposed to the elements. The clients had been living in a trailer since the fire, and Kwinter says not only was their house now riddled with mould but he had to pursue the insurance company to keep paying for the trailer.
“We're fighting every step of the way, and I keep coming up against the same actors in case after case,” says Kwinter, founding partner of Singer Kwinter Personal Injury Lawyers. “I only act for fire victims who are fighting insurance companies and I try to level the playing field. We usually take these cases on contingency, ride it out and get to a courtroom — that’s the only place where an insurance company has to answer for its actions.”
Not many firms specialize in this area, Kwinter says, and he makes the effort to educate the public as someone who’s been protecting the rights of the insured since founding Singer Kwinter in 1974. According to the law, an insurance company owes its policyholders a “Duty of Good Faith” — they have to treat claims fairly, honestly, expeditiously and can’t wield their economic might over their insureds — but “in actual fact and in real life, all too often this duty of good faith doesn’t happen,” Kwinter notes. Insurance companies are still a business trying to make a profit, which they do by collecting premiums and often doing their best to limit the amount paid out. Kwinter says he’s “fighting a system where an insurance company can throw up all sorts of hurdles” to protect its bottom line, including very often bringing in preferred contractors to do an estimate of the damage, typically as cheap as possible, and then refusing to pay more than that quote.
Many people don't realize they don’t have to use the insurance company’s preferred contractor, but there can be a dramatic difference — sometimes hundreds of thousands of dollars — in scoping the job. That’s unfair to the policyholder, Kwinter notes, and comes into conflict with the obligation of an insurance company to repair or replace the policyholder’s property with “like kind and quality”.
“In other words, if you were driving an Oldsmobile, you can't expect it to be replaced by a Cadillac. If you were driving a Cadillac, they’re not going to replace it with a Rolls Royce. You’re entitled to get back what you had.”
In an attempt to provide a solution, the Insurance Act has a specific section for what is referred to as “Appraisal.” In this process where there is a dispute as to the cost of repair or replacement, each side appoints an appraiser, and the appraisers appoint an umpire. Each arrive at a figure and if it’s two out of three, that number is binding and what the court will go by when assessing damages. But the way the legislation is drafted, according to Kwinter, is unfair to the policyholder. It states the cost of the appraisal has to be split evenly which is very unfair because for the insurance company it’s pocket change, but for the average homeowner an appraisal can be an expensive process. On top of that, much like their preferred contractors, the insurer has key appraisers picked out and once again Kwinter finds himself “dealing with the same ones over and over who do everything they can to keep the estimate low and save the insurance company money.”
This struggle is why Kwinter recommends the service of public adjustors, who “have a real function but very few people are aware of their existence.” They’re valuable because they’re usually former adjustors for insurance companies who know how the system works and can maximize the client’s recovery when it comes to the appraisal process or having a construction job scoped. They can help navigate most claims without litigation, as most people don't realize a lawyer is only required when there’s a denial of a claim, a limitation period is approaching, or the conduct of the insurance company has caused additional damages — like in Kwinter’s recent case where what could have been a properly done reconstruction by a competent contractor that resulted in a half-finished house that had to be torn down.
Public adjustors can also offer great assistance when it comes to completing the Proof of Loss form, which is another term people should be aware of. The insured is required to complete a declaration listing what they have lost and how much it will cost to repair or replace. It’s a sworn document, and if the insurance company finds a mistruth, intentional or otherwise, about even one item it can invalidate the entire claim. Kwinter once lost a case because his client didn’t fill the form out properly, and that’s why he is a firm believer that people should always have help when completing a Proof of Loss. This is where public adjustors are great assistants, because despite the insurance company's duty to assist their insureds, “they leave people to their own devices.” Kwinter says that maybe he has become too cynical over the years, but sometimes he wonders if the insurance company hopes there will be errors which will give them grounds to deny the claim.
Insurance companies are also known to employ what he has been termed “post-loss underwriting.” This refers to the case where an insurer will collect a premium for many years, but once there is a claim they get out the magnifying glass and review the application to see if there has been any misstatements. Of course, they have no such concerns while collecting premiums, Kwinter notes, adding this is frequently seen in life insurance cases. With respect to major property losses, insurers will collect premiums for years. Once there is a claim they will demand proof of purchase, receipts, invoices, bills, etc., none of which matters while premiums are being collected. Kwinter once had a case where his client brought numerous pieces of jewellery with her from Iran. They had all been wedding gifts. She was required to list each item separately and pay a very large premium. After her jewellery was stolen in a break-in, the insurer demanded proof of purchase which, obviously, she did not have.
It is extremely important when purchasing insurance to be totally candid and forthright in your application. The duty of good faith goes both ways but sometimes even that does not help. Kwinter once had a client who claimed in the application that she lived in a rowhouse. The insurance company at first tried to deny the claim, claiming it was a townhouse. Denying a claim can cost a policyholder substantial additional expenses called consequential damages. Kwinter has seen insurance companies sink businesses by refusing to pay a claim, for example a 100-year-old auto parts business he represented once that was started by his client's grandfather. The insurance company refused to pay for so long the business couldn’t sustain itself — then brought a motion for security for costs.
“The insurance company claimed the client didn’t have enough assets for the litigation,” Kwinter says. “That's what you call chutzpah.”
In that case, Kwinter won the motion.
A policyholder should consider retaining a lawyer when the behaviour of the insurance company is bad enough to go after punitive damages which, despite a high bar, Kwinter has obtained against insurance companies on three different occasions. You have to show outrageous conduct that shocks the conscience, “and juries have had no difficulty finding that in those cases,” he notes.
Insurance companies are virtually self-regulated, Kwinter says. The only time they have to answer to anyone is in a courtroom. But even then “they have a get out of jail free card — money.” If they're going into a trial where they could get hurt, they offer to settle and “a large percentage of people don’t have the stamina, energy or resources to keep going,” which Kwinter refers to this as “starving the policyholder into submission.”
If the insurance company digs in its heels too often, lawyers will give up the fight as well because many are not willing to endure a long battle. Ultimately, it’s the client who suffers because they have to decide if they’ll accept a settlement at a fraction of the amount of the claim or wait years for a trial. After the insurance company, the biggest problem clients face is the system, namely the terrible delay in getting to trial. Kwinter noted that he recently set trial dates in 2023 for two cases that have already been going on for years.
“Insurance companies know time is on their side. To the policyholder, the claim can have a dramatic impact on their life; to the insurance company, it’s one more file — and that’s the problem.”
Alf Kwinter is recognized as one of Canada’s premier legal experts in the practice of personal injury and insurance law and is certified by the Law Society of Upper Canada as a specialist in civil litigation.