Interest On Unpaid Accident Benefits
As discussed previously accident benefits are part of the no fault scheme in Ontario. Regardless, of whether you are at fault or not you can apply to your insurance company for benefits. If an insurance company does not pay you the benefit and later on at a hearing referred to as an Arbitration held at the Financial Services Commission of Ontario (FSCO) it is determined that you should have been paid the benefit there are certain interest consequences.
Specifically, section 46(1) of the accident benefits legislation (SABS) says that if a payment of a benefit is overdue, the insurer shall pay interest on the overdue amount for each day of the amount it is overdue from the date the amount became overdue at the rate of 2% per month.
However, FSCO and the courts have been looking at when interest should be payable i.e, after the Arbitrator's Decision or when the benefit was actually due. There are many decisions on this topic and also whether or not it matters that the insurance company was in receipt of a report that suggested the benefit was not payable.
Recently, the Ontario Court of Appeal upheld a lower court decision regarding interest on unpaid accident benefits. In Sorokin v. The Wawanesa Mutual the Plaintiff was successful in moving for Summary Judgment on unpaid interest that had accrued on the interest component of the Arbitrators award. The motion judge characterized interest as a "benefit" under section 46(2) of the SABS.
The motion judge also advocated for a, "broad and liberal interpretation" of the SABS. Finally, he stated that to hold otherwise, would allow insurance companies to withhold payments without consequences. The Decision was upheld at Ontario's Court of Appeal where the court held that the policy intent of section 46 was compensatory.
Additional cases that deal with interest as per the SABs are:
- Attavar v. Allstate Insurance Co. of Canada., [2003 O.J. No. 213,
- McMahon Urquhart v Zurich Insurance Company of Canada [1988] O.I.D.D. No. 34
- Abulibdeh v. RBC General Insurance Co. [2007] O.F.S.C.D. No. 138
- Mercier v. Royal & SunAlliance Insurance Co. of Canada [2004] O.J. No. 3264
- Neumeyer v. Wawanesa Mutual Insurance Co. [2005] O.J. No. 4004
- Monks v. ING Insurance Co. of Canada [2005] O.J. No. 3753
- Hejnowicz v. Coachman Insurance Co.[2006] O.F.S.C.D. No. 130
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