Insurance investigators: Be on guard when sharing info with police

Insurance investigators need to be on their guard about sharing information with police, lest they breach their duty of good faith to their insureds, note lawyers for Borden Ladner Gervais, referencing a 2021 Alberta Court of Queen’s Bench decision.

The court found an Intact Insurance claims investigator had breached the insurer’s “utmost good faith” to its client by sharing information about who was driving the car with Alberta police, who were investigating an auto accident that killed a pedestrian.

While the court found the breach was not justified under privacy act exemptions for investigations for legal proceedings, it nevertheless found the disclosure did not cause harm to the insured – because police found out the same information without the insurer’s disclosure. It also didn’t constitute a breach of bad faith, because it was not done maliciously.

“The general principle [coming out of the case] is that insurers owe their policyholders a duty to investigate claims in utmost good faith,” commented Cory Ryan, Raphael Jacob, and Serine Fakih of Borden Ladner Gervais LLP. “Insurers, and their agents, should take great care in their interactions with the police lest they divulge information that would breach their good faith obligations. Conversely, where such disclosure is necessary to assist with investigation of a claim, it may be reasonably justified, depending on the facts of the case.”

In Barata v Intact Insurance Company, the court found the insurer’s sharing of information with police was “gratuitous,” because that information was intended to benefit the police investigation only. Conversely, police in no way shared information that benefited the insurer’s investigation.

Diana Barata and Daniel Barata (engaged to be married at the time), were in Diana’s vehicle when it struck and injured a pedestrian, Cesar Vandamme, on July 9, 2017.

They stopped and spoke to Vandamme’s companions, but they got back in their vehicle and left the scene without waiting for the police or an ambulance to arrive. Later that day, police arrived at the Baratas’ home and arrested Daniel on the assumption that he was the driver.

Although Vandamme survived the collision, he later died in hospital from his injuries. Barata was charged with impaired driving causing death and several other criminal offences.

Intact insured Diana Barata, who reported the collision to her insurer. Barata told Intact’s claims investigator she was driving the car, not Daniel. Intact’s investigator volunteered that information to the police, who later charged Diana Barata with failing to stop, provide her name and address, or offer  assistance to Vandamme.

Some charges against Daniel were withdrawn. Ultimately, both he and Diana were charged with the same offence of failing to stop and provide their names and addresses, or offer assistance. Each were tried separately and acquitted.

Intact’s investigator told the court he revealed Diana’s information to police in the interest of truth, since he felt Diana Barata had lied to him about who was driving. Identifying the driver engaged exclusions under the insurance policy and the Insurance Act, as he argued.

But the court noted the police shared nothing about their investigation that would further Intact’s investigation. What’s more, police had already learned Diana had been driving when they interviewed Daniel.

“I find that [the Intact investigator’s] disclosure of the information he had obtained from [Diana] Barata was not intended by him to further his investigation of the accident and it in fact did nothing to further the insurance investigation,” the Alberta court found. “[He] was trying to help the police with their investigation, and nothing more.

“The disclosure was purely gratuitous and consequently is not reasonably justifiable as part of an insurance investigation. It was a breach of the duty of utmost good faith which both Mr. Ross and Intact owed to Ms. Barata.”

That said, however, the court found the act was not “high-handed” or “malicious,” and therefore was not done in bad faith. And because Diana Barata was acquitted, and the police had figured out she was the driver through  means other than the insurance investigator’s disclosure, she was not harmed by the breach of utmost good faith.

 

Feature photo story courtesy of iStock.com/evgeny_pylayev