Your insurance company denied your claim. Now what?

You paid your premiums for years, made a claim when something finally went wrong, and got a letter saying the insurer will not pay. Plenty of those letters do not survive a hard look. Insurance is a contract, insurers owe their policyholders a duty of good faith, and Ontario courts regularly order insurers to pay claims they wrongly refused. In serious cases the court adds damages on top.

The denial letter should set out the insurer's reasons. Most denials fall into a handful of categories:

• Exclusions: The insurer says the loss falls within an exclusion clause. Wear and tear, vacancy, a particular kind of water damage, or a commercial activity the policy does not cover.
• Late notice or late proof of loss: You reported the loss or filed documents outside the policy's timelines.
• Alleged misrepresentation: The insurer says you gave inaccurate information when you applied for or renewed the policy.
• Disputed value or cause: Coverage is admitted but the insurer disputes what the loss is worth, or attributes it to an uncovered cause.

None of these is automatically fatal. Courts read exclusion clauses narrowly, against the insurer that drafted them. A missed notice deadline or an imperfect proof of loss can sometimes be forgiven through relief from forfeiture, under section 129 of the Insurance Act or section 98 of the Courts of Justice Act, where the slip caused the insurer no real prejudice. And misrepresentation is an allegation the insurer has to prove, not just assert.

1. 01Get the denial in writing. If the adjuster called, ask for the position, and the specific policy wording relied on, in a letter or email.
2. 02Request a complete copy of your policy. Not just the certificate. Ask for the full wording, including every endorsement. You are entitled to it, and coverage disputes tend to turn on it.
3. 03Preserve your evidence. Photos, receipts, invoices, correspondence with the adjuster, and notes of every phone call, with dates.
4. 04Do not treat the first answer as final. Insurers revisit denials when a policyholder pushes back with the policy wording and the case law. Many claims get paid, in whole or in part, after that challenge.
5. 05Watch your limitation period. In Ontario you generally have two years from the denial to start a court action. Some policies also require earlier steps, like a sworn proof of loss on a short deadline. The clock does not pause while you negotiate.

Coverage fights are won on paper. Before anyone writes a demand letter, pull together one file containing:

• The full policy wording, including every endorsement, not just the certificate of insurance.
• The denial letter, plus any earlier reservation of rights letter.
• All correspondence with the adjuster, letters and emails both.
• Every proof of loss form you submitted, with the dates you sent them.
• Photos of the damage, receipts, invoices, and repair or replacement estimates.
• Your own notes of phone calls with the insurer, with dates and the name of who you spoke to.
• Your prior policies and original application, if the insurer is alleging misrepresentation.

Gaps in this file are not fatal. Much of it also sits in the insurer's records, and a lawsuit forces the insurer to produce its side, including the adjuster's notes. But the more you hand your lawyer on day one, the faster and cheaper the assessment is.

An insurer's obligations go beyond an ordinary commercial contract. It has to investigate fairly, assess the claim on its merits, and pay promptly what is owed. An insurer that denies without a reasonable basis, drags out the investigation to wear a policyholder down, or cherry-picks the evidence risks more than the claim itself. Ontario courts can award damages for mental distress and, in serious cases, punitive damages. In Whiten v. Pilot Insurance, the Supreme Court of Canada upheld a $1 million punitive award against an insurer that spent years pressing an arson theory against its own insureds, a family whose home had burned down in the middle of winter, after its own experts found the fire was accidental.

If the insurer accepts coverage but disputes the amount, section 128 of the Insurance Act provides an appraisal process. Each side appoints an appraiser, the appraisers select an umpire, and the resulting award binds both sides on the value of the loss. It is usually faster and cheaper than litigating quantum, and it leaves coverage issues to be fought separately if they arise.

Ontario gives you a few ways to press an insurer without starting a lawsuit. Every insurer must have an internal complaint process, ending with a complaint officer or company ombudsman who issues a final position letter. If that letter does not resolve things, the General Insurance OmbudService, known as GIO, takes complaints about home, auto, and business insurers at no cost to you. For conduct issues, such as an insurer that will not respond at all or appears to have breached the Insurance Act, you can complain to FSRA, the provincial regulator. Be clear-eyed about what each one does: GIO's process is informal and cannot force the insurer to pay, and FSRA regulates insurer conduct but does not decide individual claim disputes or order payment on your file.

These routes cost nothing and occasionally shake a stalled file loose. But a lawsuit is the only lever that can compel production of the insurer's file and end in a binding judgment. And none of these complaint processes pauses the two-year limitation clock, so do not let one run while your deadline quietly approaches.

Most denied-claim fights follow a recognizable shape. It starts with a demand letter that sets out the policy wording, the facts, and the case law against the denial. A meaningful number of claims resolve at this stage, because an insurer that sees its denial will not survive a courtroom often prefers to pay before the costs mount.

If the insurer holds its position, the next step is a statement of claim. Litigation then forces what a complaint letter cannot: the insurer must produce its file, including the adjuster's notes and internal assessments, and its representative must answer questions under oath at an examination for discovery. In Toronto, Ottawa, and Windsor, mediation is mandatory in most civil actions, and it comes relatively early in the case. That session, with a full record on the table, is where many of these disputes settle.

Honest framing on timing: a claim that resolves on a demand letter can be over in a few months. A claim that needs a lawsuit usually takes longer, often a year or more. Very few go all the way to trial, but the ones that do are the ones where the outcome justifies the wait.

A denial letter is the insurer's reading of its own policy. Before you walk away from a claim, have a lawyer who reads these policies for a living tell you whether that reading holds up.

• Ontario courts
• Evidence & documents
• Deadlines

This article is general information, not legal advice, and does not create a solicitor-client relationship. It is current as at its publication date and is not revised as the law changes. For advice on your specific situation, book a consultation or call 416-639-0887.

Written by

Caleesis Telesh

Founder & Principal Lawyer

LL.B. · B.A., York University · Member, Law Society of Ontario

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