If your insurance company is withholding payments, then you should know you’ve got a problem. And you should realize that legal action is the right way to address that issue, whether your insurance company has officially denied you or not. As the Court of Appeal’s recent decision in Kumarasamy v. Western Life Assurance Company shows, this realization signals the discovery of a claim, thereby opening the two-year limitation period during which the claim can be brought before the courts.
Kamalavannan Kumarasamy was unable to work after a car accident in August 2014. Fortunately, through his job he had a long-term disability policy with Western Life Assurance Company that could begin paying out benefits six months after an accident. While he took action on his tort and accident benefit claims immediately, he notified Western Life of his long-term disability claim six and a half months after his accident—without submitting the required application forms. Western Life sent several letters regarding the missing forms, but according to the plaintiff, he did not receive any of these letters except the last one, notifying him that in June of 2015, his file was closed.
The plaintiff involved his lawyers in the claim in late 2016. While Western Life communicated with his lawyers for a few months, they advised that reviewing his claim did not mean they were waiving their statutory or policy protections regarding limitation periods. The long-term benefits application was eventually submitted in March 2017, and on June 28, 2017, two years after Kumarasamy was first notified that his file was closed, Western Life advised the plaintiff that the claim was denied because of the delay.
The plaintiff issued a statement of claim in June 28, 2019, two years after the final denial letter. Western Life moved to dismiss the claim for a failure to file within the limitation period. The Superior Court motion judge allowed Kumarasamy’s claim and found that the limitation period had not begun to run until Western Life expressly denied the claim in June 2017.
The Court of Appeal disagreed.
Relying on Thompson v. Sun Life Assurance Company of Canada, the Court of Appeal found the limitation period starts once the insured realizes the insurer will not be forthcoming with benefits, whether the company has issued an outright denial or not. In short, Kumarasamy should have discovered he could pursue legal action against his insurance company before they definitively closed his file.
The Court of Appeal’s decision affirms that poor communication does not delay the start of the limitation period. Unlike important paperwork, a discovered claim is not something that can get lost in the mail.
Kumarasamy v. Western Life Assurance Company, 2021 ONCA 849
Thompson v. Sun Life Assurance Company of Canada, 2015 ONCA 162
Western Life sent several letters regarding the missing forms, but according to the plaintiff, he did not receive any of these letters except the last one, notifying him that his file was closed.