What is insurance bad faith in Canada?
Bad faith occurs when an insurer breaches its duty to handle a claim in good faith and deal fairly — for example, denying a valid claim without proper investigation, making lowball offers to a vulnerable claimant, or unreasonable delay. The insurer's duty of good faith is independent of the contract, so its breach can attract aggravated and punitive damages.
How much can I recover for insurer bad faith in Canada?
You can recover the denied benefit, plus aggravated damages for mental distress, plus punitive damages where the conduct is reprehensible. In Whiten v. Pilot Insurance (2002), the Supreme Court of Canada upheld a $1 million punitive damages award against an insurer that denied a fire loss claim in bad faith.
What is the difference between aggravated and punitive damages?
Aggravated damages compensate the claimant for additional mental distress caused by the insurer's high-handed conduct — they are compensatory. Punitive damages punish the insurer and deter similar conduct; they are awarded only where the conduct departs markedly from ordinary standards of decency.
Do I have to prove a separate injury for bad-faith damages?
For aggravated damages you generally must show mental distress that goes beyond ordinary upset. For punitive damages you must show an independent actionable wrong — the breach of the insurer's duty of good faith qualifies, as confirmed in Whiten v. Pilot.