For years disability benefits exist quietly in the background; you pay the premiums for peace of mind rather than any expectation of ever using them. But when the unthinkable happens, a serious personal injury or impairment, those benefits quickly come to the foreground. Unfortunately, in some cases those much-needed benefits can be denied by the insurance company in what is called ‘bad faith’ bargaining.

The relationship between an insurance company and its insured customer is a fiduciary relationship in which the Insurer must act in the utmost good faith. Insurance companies are legally bound to operate in good faith; they must address claims quickly, investigate them fully and engage in fair practices with customers. Sometimes, the insurance company’s conduct may give rise to a claim for a breach of their duty to act in good faith. Such a breach may give rise to a claim for punitive and aggravated damages. While these companies often fulfill their duties, in an overzealous effort to prevent fraud they sometimes deny legitimate claims, causing additional hardship to injured or traumatized individuals. This type of behaviour can be seen as a breach of contract on the part of the insurance company and may give rise to a claim for mental distress.

Many high profile cases centring on bad-faith bargaining have been heard by the Supreme Court of Canada in recent years, which has publicized the issue. In addition to pressuring insurance companies to reinstate disability benefits, personal injury lawyers may also discover that their client has suffered additional hardship as a result of the lost benefits and the insurer’s conduct, giving rise to aggravated damages.

In most successfully appealed cases of denied benefits, the insurance company will be ordered to pay simply the amount they withheld from the client. Bad-faith claims are reserved for cases in which the insurer has acted with malice, or in a deliberate effort to pressure a client into accepting unsuitably low compensation.

At Horowitz Injury Law, we know how to hold insurance companies to account. If you’ve been denied long-term disability benefits visit to learn more or to schedule a free consultation.