Case Commentary – Insurer Punished for Delaying Insurance Payments After Fire Loss


An insurer that improperly delayed insurance payments by two years following a fire loss has been ordered to pay punitive damages, on top of replacement costs and lost profits. The plaintiff in J.I.L.M. Enterprises & Investments Ltd v. Intact Insurance was the owner and operator of the Dorian Inn, a motel, restaurant and general store about an hour northeast of Thunder Bay. The establishment was destroyed in a fire in May 2009, along with its former gas bar that was in the process of being refurbished.

Delayed insurance payment after fire loss was a breach of contract

The insurance adjuster that investigated the fire loss suspected arson, however the judge determined that there was no real evidence to support this position. Within four months of the fire, the Fire Marshall concluded that the cause was “undetermined” and there was nothing to justify further investigation. Nonetheless, the adjuster persisted in his position that the plaintiffs were responsible for the fire and his investigation continued for at least another six months.

Despite Intact concluding in late spring 2010 that there was no evidence of arson, payment under the policy was inexplicably delayed for another two years. The plaintiff was finally paid the actual cash value of the property in April 2012, almost three years after the fire.

The judge found that although an insurer is entitled to investigate reasonable suspicions, and the length of investigations may vary depending on circumstances, in this case it was unreasonable to delay payment after May 2010. Ultimately, Intact’s failure to pay the insured for two years was a breach of the insurance contract.

Punitive damages awarded for offensive behaviour by fire loss adjuster

Punitive damages are awarded in certain circumstances where a defendant’s conduct is considered to be harsh, vindictive or malicious. These damages are intended to punish the defendant for their bad behaviour, and are payable on top of all other damages awarded to the plaintiff.

In this case, the judge asked whether Intact’s behaviour represented a marked departure from acceptable standards, such as to offed the decency of the court. He concluded that the adjuster, without credible evidence, had persisted in taking an adversarial position. The most egregious of his actions were two separate Crime Stoppers campaigns which implied police investigation was ongoing, and implicated the plaintiffs.

To punish Intact and deter future similar behaviour, the court awarded punitive damages equal to 10% of the actual cash value owing for each of the two years that Intact delayed payment.

Toronto legal advice for fire loss claims

Dealing with your insurer after a fire loss can be complicated and time consuming, and in some cases you may be treated unfairly or have your insurance payments delayed without a sufficient explanation. You need a legal team that understands how the insurance companies operate.

Jasmine Daya & Co. has a team of dedicated lawyers with over 110 years of cumulative experience resolving disputes. Our firm was founded by Jack Fireman, who began his career working on behalf of insurers. With this expertise, we can give you an advantage in your fire loss claim.

We provide new clients with a free consultation, so if you have questions about a fire loss, or have encountered issues dealing with your insurance company, contact us online or call our office to make an appointment at 416-967-9100.