Chapter 2 –
Liability Injury Claims
Handling Bodily Injury
Claims
- Emphasis
on people skills is necessary; sincerity and caring lead to reasonable
relationships based on trust and respect
-
The adjuster must fulfil the contractual
elements of the policy to the benefit of both the insured and the insurer
-
The adjuster must be neutral in order to
deliver unbiased investigation of the facts and a proper assessment of
liability; any bias on the part of the adjuster will weaken the credibility of
the claim handling and outcome
-
The adjuster must manage expectations of
the insured by:
·
explaining the process,
·
foreseeing a reasonable outcome
·
timing; delivery benefits to the
claimant and explanation as to why benefits don't apply
-
A failure to manage expectations of the
insured may result in the risk of litigation;
the adjuster must ensure the claimant always has the right to retain a
lawyer
Evaluating
Policy Coverage
-
The adjuster must evaluate and validate
the policy covering the loss and the benefits available to the claimant
-
Difference in liability policy wordings
may vary from one insurer to the other and careful review of the policy is
required
-
Insurer owes a defence against
allegations that are covered by the policy
-
The insured will be indemnified for the
loss if such a loss is covered by the policy
-
If the insured is legally liable then
the claimant will have a right of recovery under the liability section of the
policy for his/her injuries
-
Paying defence cost, which are very
high, is an incentive to actively seek resolution of a claim even when coverage
for the claim is questionable
-
The 10 steps for follow when reading a
liability policy when a claim is made are as follows:
i. Review
the declaration to determine who is named as insured, policy period and limits
of insurance
ii. Review
the parts which define who qualify as an insured under the policy in addition
to the named insured. Example - which
corporate entity is named in the legal action and do they qualify for a
defence. Subsidiaries or parent
companies may not qualify as insureds under the policy
iii. Review
the insuring agreement. Questions that
need to be asked are:
-Does the incident qualify as an occurrence?
-Has there been PD or BI?
-Has the policy coverage been triggered?
-Does the incident qualify as an occurrence?
-Has there been PD or BI?
-Has the policy coverage been triggered?
iv. Do
any exclusions apply?
v. Do
any exceptions to exclusions apply?
vi. How
do policy definitions for special terms modify the coverage?
Example - BI means in the CGL policy "Bodily injury, sickness or disease sustained by a person including death resulting from any of these at any time"
Example - BI means in the CGL policy "Bodily injury, sickness or disease sustained by a person including death resulting from any of these at any time"
vii. How
are limits of insurance to apply?
Example - CGL policy states: "Limits of insurance shown on the 'Coverage Summary'....insurer will pay regardless of the number of:
a) Insured (as it is defined in the policy)
b) Claims made or 'actions' brought; or
c) Persons or organizations making claims or bringing 'actions'
Example - CGL policy states: "Limits of insurance shown on the 'Coverage Summary'....insurer will pay regardless of the number of:
a) Insured (as it is defined in the policy)
b) Claims made or 'actions' brought; or
c) Persons or organizations making claims or bringing 'actions'
viii.
What endorsements, if any, will affect
coverage?
ix. Deductibles
may apply to indemnity payments and possibly to defense costs
x. Have
policy conditions been breached by the insured which could affect coverage?
Gathering
Information for Deciding Liability
-
Insured is the primary source of
information for determining liability
-
Adjuster will meet with the claimant to
verify the facts of the claim
-
The information about a claim that is
needed by the adjuster from the insured at first contact are:
·
How was the insured put on notice?
·
What are the details of the scene of the
accident?
·
What were the actions of the insured at
the scene of the accident?
·
Did the insured investigate the site of
the accident?
·
What was the environment surrounding the
accident?
Like - weather conditions, any events happening at the site that affected the loss, site conditions, actions of others that played a role in the loss
Like - weather conditions, any events happening at the site that affected the loss, site conditions, actions of others that played a role in the loss
·
For a particular type of loss what was
the insured doing?
·
What was the claimant doing?
·
Were there any witnesses?
·
Was there a police report filed or first
responders on scene?
·
What were the actions of the claimant
and insured after the loss?
-
Legal liability of the insured is
determined by the circumstances of the claim and how these circumstances apply
to the law
-
Duty
of care
- insured's responsibility to others in a given situation; did the insured act in a way a reasonable
prudent person would act or did not act, even though a reasonable and prudent
would have taken action; this will
determine if the insured had a duty of care towards the claimant
-
Standard
of care -
statutes may define what is the standard of care that an insured has to
others; example - as the occupier of the
premises the insured has a duty to keep those who come onto his /her premises
free from any harm; the level of care
changes with the reason the claimant comes on to the premises; there is a difference in the standard of care
for a trespasser versus a invitee (person who comes on to the premises to
conduct business); in the absence of
statute law, common law will provide guidance for what is the standard of care
-
Duty of care as an employer to its
employees are:
·
Provide a safe workplace and proper
tools for employees to do the work
·
Provide instruction to the employee on
how to perform the work safely
·
Warn employees of any inherent dangers
to the work
·
Duty of care of employers to employees
has broadened to include protecting employees from harm when alcohol is served
or when consumption of alcohol is permitted on work premises
Example - ABC Machine Shop had decided to have a gathering to reward employees who worked overtime consistently for 2 weeks. The reward would be presented on the final day of overtime, where the management team would serve beer at the gathering after the final overtime was completed. Daniel, a 19 year old rookie, completed the required overtime and at the gathering consumed 9 beers. Daniel decided to drive home and he was involved in a motor vehicle accident (MVA). Daniel was severely injured due to the MVA. Since the employer served beer at the gathering, the employer was held liable for Daniel's injury as it was foreseeable that his alcohol consumption would likely lead to a MVA.
Example - ABC Machine Shop had decided to have a gathering to reward employees who worked overtime consistently for 2 weeks. The reward would be presented on the final day of overtime, where the management team would serve beer at the gathering after the final overtime was completed. Daniel, a 19 year old rookie, completed the required overtime and at the gathering consumed 9 beers. Daniel decided to drive home and he was involved in a motor vehicle accident (MVA). Daniel was severely injured due to the MVA. Since the employer served beer at the gathering, the employer was held liable for Daniel's injury as it was foreseeable that his alcohol consumption would likely lead to a MVA.
·
Ensure employee's safety which can
continue after employee leaves the premises or company event
·
Extends to a person (TP) who is harmed
by the employee of the employer, if such negligence by the employee was
foreseeable by the employer; Example - Daniel continued, if he had collided
with a pedestrian during his MVA, then the pedestrian could present legal
action against ABC Machine Shop
-
Under common law if the employer is
negligent due to a breach in the duty of care and an employee is injured, the
employee has recourse against the employer but negligence must be proven by the
employee
-
Worker's compensation legislation
indemnifies workers for the cost of injuries arising out of accidents due to
their employment whether negligence is a factor or not
-
Most provinces will provide worker's
compensation in return the employee who suffers injuries does not sue their
employer under the tort law for negligence
Vicarious
Liability
-
Strict liability imposed on a party who
was not actually involved in the occurrence but has a special relationship with
the negligent party
-
Originated between employer and employee's
relationship where the employer could be held liable for the negligence of
their employees
-
The tortfeasor (employee) is not excuse
of his/her action and the employer can bring legal action against the employee
for any damages paid by the employer
-
Vicarious liability does NOT apply when
an independent contractor is hired to work, except if the person supervising
the work is the employee of the employer;
vicarious liability will extend to the employer if the independent
contractor was hired to do something unlawful
-
Vicarious liability will also be imposed
when the independent contractor is in possession of dangerous materials or
hired to do a job that entails dangerous work
Social Host
Liability
-
Vicarious liability can extend to a
social host who have a duty of care to his/her guests
-
Hosts who serve alcohol to minors during
social functions and allow such guests to drive home could be assessed a
percentage of liability
-
Example - Jim & Mary hosted a party
for their teenage son's friends. Peter was
one of the friends invited to the party.
Peter had consumed a lot of alcohol and was allowed to drive away from
the party without proper supervision.
Peter subsequently was involved in a MVA hurting himself and several
other people. Jim & Mary were held
liable for the injuries to Peter and the other victims because they had
permitted the teenager guests to drink and then drive home after the party.
-
This type of liability does not
uniformly apply to commercial establishments that serve alcohol in the course
of their business affairs
Defences to a
Liability Claim
-
Elements of an actionable tort were not
met
-
Damages were remote from the breach of
action
-
Denial of damages or wrongful act
-
An emergency action due to the situation
could excuse a wrongful act; example - the insured had a heart attack (having
no prior medical warning) while driving and drove into a home causing PD
-
An act of God caused the damages;
example - the water tower of a local business fell on to the neighbor's home
causing damage, but was due to a tornado that ravaged the local area
-
Statutory defence to the claim
-
Contributory negligence
-
Volenti non-fit injuria - Voluntary
Assumption of Risk; those who are
willing to participate in a hazardous situation can NOT claim for
injuries; example - Peter is a goalie
for his local pick-up hockey team and knew his opponent team was well trained
in slap shots. One of the opposing
players rifled a slap shot at Peter, who defended the goal, but was seriously
injured in the process. Peter voluntarily
assumed the risk of injury by playing the position of goalie when he knew the
other team would use force to push the puck past his attempts to stop it from
entering the goalie net. Peter was
unsuccessful in pursuing a civil action against the opposing team for his
injuries.
Witnesses
-
Reliable evidence, which includes
witness statements, is crucial to any claim because:
·
The most truthful story is told right
after the event
·
Evidence and witness statements must
stand up to challenges
·
Any scientific, technical, or
specialized knowledge should be delivered by an expert having credentials that
will stand up to scrutiny
·
Experts should explain the evidence in a
way that is easily understood by a lay-person
·
Example - To assess a brain injury the
loss adjuster should hire an expert in psychology, neuro-psychology, neurology,
or psychiatry
Other Insured
Contracts
-
Depending on the nature of the accident
copies of contracts may be needed
-
For slip and fall losses, maintenance
contracts and records need to be examined in order to see if liability can be
shifted to the contractor hired;
contracts could have hold harmless and indemnity provisions which place
liability on the contractor, with no opportunity for joint liability extending
to the insured
Causation
-
The law deals with claimant's who have
suffered from a previous injury or medical condition (known or unknown to the victim)
which have been aggravated by an accident due to the insured's negligence as
one injury and the claimant would be able to recover for all injuries, prior,
aggravated and new
-
Material
Contribution - to establish negligence on the part of the
tortfeasor when there are multiple causes for an injury. The insured could be held liable even if
his/her act alone was not enough to cause injury, but his/her actions
materially contributed in the cause of the injury
-
The claimant (victim) must prove that
what the insured did was necessary and contributed to the cause of the injury
-
Thin
Skull Legal Theory - claimant is accepted as is. The courts will NOT excuse the injury of the
claimant because s/he was more vulnerable to injury. The courts will NOT accept an argument that
if the claimant was an "average" person then s/he would not have
suffered as much, but because she was more vulnerable to injury, the victim
should assume partial responsibility
-
Example - John had only one eye. Alessia was driving her car and hit John who
was standing at a bus stop. The accident
damaged John's only eye rendering him blind.
The court assessed Alessia's negligence as 100% liable, and therefore
she is responsible for the entire blindness now suffered by John. Alessia's argument that if John had two eyes
he would only be partially blind, and therefore John should have partial
responsibility. The court's used the
Thin Skull Doctrine to support that the entire blindness is the cause of
Alessia's negligence and that the entire judgement to John rests only with
Alessia.
-
A defense that is possible for an injury
that aggravated a pre-existing condition is that the aggravated injury was
inevitable due to the pre-existing condition.
There is no injury if the pre-existing condition would have eventually
resulted in the current state of disability of the claimant, even if the accident
hadn't occurred.
-
Example - John was suffering glaucoma in
his one good eye and would have been blind in a few years. The accident only sped up the inevitable and
this was presented to the court who considered the independent medical reports
that supported Alessia's argument. The
courts final decision is that Alessia was still responsible for the injury
suffered by John but limited the damages from the date of the loss to the date
that John was likely (probably) going to go blind. The court ruled that the victim shouldn't be
without recovery because he was vulnerable and the Thin Skull Doctrine was
still applicable.
-
The
standard of proof generally required to establish causation in civil law is to
satisfy a balance of probabilities to prove a fact. This means that a 51% chance will tip the scales
of balance and the event is more likely, than not, to have occurred.
-
A person with a pre-existing problem may
have been able to function reasonably well before the accident. The injury caused by the accident plus the
pre-existing condition has now resulted in the disability of the victim. The law allows the claimant (victim) to
recover for the disability created by the combination of pre-existing condition
and injury suffered from the accident.
Sharing
Liability and Contributory Negligence in BI Claims
-
Contributory negligence, partial
assessment of liability, can be apportioned on to the claimant if his/her
actions helped to cause the accident
-
If contributory negligence is
apportioned to the claimant then his/her award will be reduced by the percentage
attributed to the claimant
-
Example - John was "J" walking
and step in front of Paul's vehicle.
Paul was driving properly and following the rules of the road. The highway traffic act held Paul 100%
liable, because he hit a pedestrian but the court deemed John's actions were
negligent to some degree, and apportioned contributory negligence of 75%
against John. John's damages were
reduced to 25% of the entire award.
-
Another tortfeasor added to the action
could affect the loss reserves. The
adjuster must consider if the other tortfeasor is financially able to satisfy a
judgement or whether there is insurance to cover the loss
-
The claimant, under joint & several
liability, can recover for their injuries and property damage from the party
that is most likely to satisfy the judgement.
The tortfeasor able to satisfy the judgement must seek recovery from
other tortfeasors, only if they are not impecunious (penniless)
-
Intervening
event
- an event or situation which breaks the chain events leading to the loss. This could exonerate (relieve) the insured of
any negligence.
Example - Building code inspector did not identify that the handrail for the staircase was faulty. Salim fell while using the staircase and suffered injuries. The installation of the handrail was done correctly but due to wear & tear it was no longer functioning properly. The inspector was negligent in his inspection and was deemed liable for Salim's injuries. The property owner was not considered negligent since it depended on the building code inspector to bring to its attention any defaults in the building and its safety.
Example - Building code inspector did not identify that the handrail for the staircase was faulty. Salim fell while using the staircase and suffered injuries. The installation of the handrail was done correctly but due to wear & tear it was no longer functioning properly. The inspector was negligent in his inspection and was deemed liable for Salim's injuries. The property owner was not considered negligent since it depended on the building code inspector to bring to its attention any defaults in the building and its safety.
-
The insured would not be held liable if
a claimant recklessly decided to engage in some outrageously dangerous activity
that was likely to aggravate his/her injury.
Example - Mark used the outside steps at a local church as a skateboarding ground. The church warned Mark a number of times that his outrageously dangerous activity will lead to him being injured. Mark had suffered a sprained right ankle while running for the bus earlier that day and later that day tried to use the outside steps as a slide with his skateboard. Mark broke his right ankle and his parents attempted to sue the church. The court found that Mark's actions were reckless, and had only further injured himself. His claim was denied.
Example - Mark used the outside steps at a local church as a skateboarding ground. The church warned Mark a number of times that his outrageously dangerous activity will lead to him being injured. Mark had suffered a sprained right ankle while running for the bus earlier that day and later that day tried to use the outside steps as a slide with his skateboard. Mark broke his right ankle and his parents attempted to sue the church. The court found that Mark's actions were reckless, and had only further injured himself. His claim was denied.
Mitigating the
Injury
-
The claimant has a duty to mitigate the
loss; the claimant should be warned of his/her responsibilities in a loss event.
Example - Patty was traumatized due to the insured's negligence. Patty had suffered psychological issues and was advised by the loss adjuster to seek medical help. Patty visited her family doctor, and was provided a treatment plan to follow. Patty did not follow it and had never properly recovered from her psychological trauma. The court ruled that Patty had a duty of care to mitigate her injury and failed to do so by not implementing the treatment plan that was provided to her by her doctor. Her award was reduced as a result.
Example - Patty was traumatized due to the insured's negligence. Patty had suffered psychological issues and was advised by the loss adjuster to seek medical help. Patty visited her family doctor, and was provided a treatment plan to follow. Patty did not follow it and had never properly recovered from her psychological trauma. The court ruled that Patty had a duty of care to mitigate her injury and failed to do so by not implementing the treatment plan that was provided to her by her doctor. Her award was reduced as a result.
Youth and
Parental Responsibility
-
In Canada, children under the age of
five years (tender age) have not been held liable for contributory negligence
or liability in tort
-
Children during the middle years until
adulthood have been held liable but a comparison is made to other children of
the same age, intelligence and experience, to see whether the care was properly
exercised by the offending child
-
Parent's would be liable for their
children's acts under the following circumstances:
·
Child acting on the parent's express
instructions
·
Child employed by the parent and acting
within the scope of their employment
·
Allowing the child (with parental
consent) to control a dangerous thing that causes PD or BI to an innocent TP
The Claimant as a
Source of Information
-
Claimant may have information about
witnesses, or other persons with them at the time of the accident
-
The adjuster should contact the claimant
(as soon as possible) after the accident to collect information and verify the
loss details provided by the insured
-
The adjuster should try to uncover
information that the claimant knew of existing conditions of the accident site
that could have contributed to the damages suffered.
Example - Claimant knew the pavement was uneven in the area prior to the slip and fall incident
Example - Claimant knew the pavement was uneven in the area prior to the slip and fall incident
-
The adjuster should document the
claimant's version of the accident. This
will help the adjuster confirm liability of the insured or able to reveal
inconsistencies and inaccuracies in the claimant's and/or insured's statement
-
A claimant's lawyer can slow an
investigation by restricting the adjuster from contacting the claimant, by
invoking privilege
-
The adjuster can accelerate the process
by sending copies of status letters directly to the claimant even if the
claimant has retained a lawyer; another action to accelerate the process is to
make a motion to produce the information needed on the file. The results of this motion will depend on the
jurisdiction where the loss occurred.
Example, in Toronto, Windsor and Ottawa fast track mediation is
mandatory for certain claims.
-
The longer a claim stays open, the
likelier it is that evidence will weaken or disappear, and that the lawyer will
be able to earn higher fees
-
After the investigation and report are
completed, the independent adjuster must often wait for instructions from the
insurer
-
The adjuster should keep in touch with
the claimant (if possible) on a regular basis to manage expectations and
explain the aspects of the case
Investigating to
Evaluate Injuries
-
The factors that can affect the value of
a TP claimant's injuries are:
·
Claimant's age
·
Pre-accident health status
·
Information to help understand what financial
effect the injury has had on the claimant
·
Actual wage loss
·
Potential wage loss
·
Other job related information
·
The number of dependents associated with
the claimant
·
Current and prior medical information
·
Current employment information
·
Case law & precedents that can
predict the approximate value of general damages
·
Claimant's education
·
Claimant's recreational activities that
have been negatively impacted due to the injuries suffered
·
The impact of injuries on the claimant
which have affected their ability to live an active lifestyle
·
Effects of the economy on the claimant's
job position
·
Ordinary effects of inflation
-
The adjuster should have some medical
jargon knowledge to read over the claimant's medical report
-
A diagnosis made by the attending doctor
is open to interpretation; i.e. the diagnosis is hypothetical and should be
confirmed by medical tests in order to determine a proper treatment plan to
help the claimant recover quickly
-
Medical experts may not have necessarily
based their decision on objective functional limitations, instead have
evaluated the claimant's response to pain, psychological distress, and signs of
fatigue and sleep deprivation; i.e. subjective complaints exhibited by the
patient
-
Not all injuries can be measured
objectively and are largely based on the claimant's description of what is
wrong
-
The effect of the same injury can have a
range of impact on different claimants.
This is the reason why some claimants having the same injury can be
awarded different amounts for damages.
Example - There are two (2) claimants, one is a right handed surgeon and the other a left handed accountant. Both are involved in a MVA and both suffer permanent immobilization of their right arm. The impact of the same injury has completely different result for each claimant. The surgeon will never recover from the injury to return to his work and has lost the ability to practice medicine.
On the other hand, the accountant has suffered the same injury but with some rehabilitation and exercise was able to return to work and overcome his injury as he was left handed. The impacts of the same injury have left one claimant completely devastated and the other able to overcome the injury and resume a somewhat normal life post accident. As such the award for the surgeon will be much greater than that of the accountant due to the severity of the impact the injury has had on each of the claimant's lives.
Example - There are two (2) claimants, one is a right handed surgeon and the other a left handed accountant. Both are involved in a MVA and both suffer permanent immobilization of their right arm. The impact of the same injury has completely different result for each claimant. The surgeon will never recover from the injury to return to his work and has lost the ability to practice medicine.
On the other hand, the accountant has suffered the same injury but with some rehabilitation and exercise was able to return to work and overcome his injury as he was left handed. The impacts of the same injury have left one claimant completely devastated and the other able to overcome the injury and resume a somewhat normal life post accident. As such the award for the surgeon will be much greater than that of the accountant due to the severity of the impact the injury has had on each of the claimant's lives.
-
Compensation varies according to how the
injury has affected the lifestyle of the claimant. Damages are set based on the degree of the
disability reported and its effects on the injured party's ability to
function. The percentage of disability
may be subject to negotiation.
-
The adjuster should understand the
reasoning and logic behind each element of a settlement proposal. Excessive demands can be identified,
questioned, and an alternative settlement proposed.
-
Assessing the character of a claimant is
necessary in order to get a sense of the kind of person they are dealing with;
a keen sense of this understanding will allow the adjuster to determine what
kind of person is advancing the claim.
-
Possible fraudulent behaviour illustrated
by the claimant when advancing a claim are:
·
Activities inconsistent with the type of
injury claimed
·
Subjective complaints which are unable
to be verified by objective findings by doctor
·
Excessive treatments of chiropractic,
physiotherapy and massage therapy
·
A overwhelming amount of medical and
treatment reports received for the claimant; possible "planned"
injury
-
In certain jurisdiction legislation has
created lucrative benefits that are available without proper verification of
legitimacy of the accident or claimant.
Add to this accelerated time guidelines for paying claims and
investigations remain incomplete due to the pay first environment, in addition the
increased number of fraudulent claims presented, becomes overwhelming for the
system to properly screen real claimants suffering real injuries from
fraudulent ones
-
Surveillance is a tool that can be used
to document activities performed by the claimant which are inconsistent with
the types of injuries claimed.
Surveillance can either validate the claimant's injuries and legitimize
the claim or show inconsistencies revealing fraudulent activities or show why a
claim hasn't resolved in a timely fashion
-
Surveillance should be used when the
claimant least suspects it. The adjuster
must exercise good judgement to balance the private interests of the insurer
against the rights of the claimant.
-
The claimant's rights can be upheld by
ensuring that the:
·
Surveillance activity is readily
observable by any member of the public
·
Person doing the surveillance has been
retained to do it
·
Purpose for initiating the surveillance
is proper
-
The claimant is responsible for proving
his/her injuries and the insured is at-fault for the loss. The adjuster, on behalf of the insurer and
insured, considers what defense theories apply and what strategies will make
the defense stronger
The Employer as
an Information Source
-
An employer can shed light on a
claimant's injury by:
·
Advising what physical aspects are
needed for the job
·
How claimant is affected by the injury
when it comes to doing the job
·
Employer can aid in the recovery by
modifying work and/or hours for claimant while s/he is injured
·
Employer can verify claimant's wages,
job title, and years of employment
Memory Issues
-
The loss details presented by the
claimant will likely change overtime
-
Memory is not like a video tape
recording, instead memory remembers events and uses logic or theory to fill in
the gaps
-
Distortion in memory is not necessarily
a conscious intent to deceive but because memory is often unstable
-
The closer one is to getting a statement
right after the loss the better the recollection of the statement giver; the later one is in getting a statement after
an accident the more distorted the details will be
-
The adjuster should record evidence
about symptoms, causation and details relevant to the loss as soon as they are
related in order to preserve their credibility
Reserving
Process for Bodily Injury Claims
-
The effects of injury and liability
exposure are both considered and insurers have created their own forms to
organize expenses arising from injury claims
-
The forms would list the heads of
damages and a computer (spreadsheet) program would calculate interest costs
once the rates are inputted into the appropriate data fields
-
The longer the file is open the more
likely the settlement amount will increase
-
For serious and permanent disability
claims, a more elaborate bodily injury assessment computer program will be
modified and used
-
Discount
Rate
- considers how inflation affects a person's earnings
- the investment rate is often higher than inflation rate and will lead to a reduction in
damages
- aka Net Discount Factor and Capitalization Rate
- the investment rate is often higher than inflation rate and will lead to a reduction in
damages
- aka Net Discount Factor and Capitalization Rate
-
A settlement is Grossed Up when the settlement amount is subject to a tax. This is done to compensate the claimant for
the decreased award due to the tax being applied. The calculation is case specific depending on
the evidence.
Categorizing
Damages
-
There are four (4) primary areas of
damages which are:
1. Special Damages
-AKA in Quebec this is referred to as Pre-Trial Pecuniary Loss
-Represents actual expenses resulting from the injury from the date of loss to the date of trial
-Divided into:
a) Loss of working capacity - incurred loss of earnings
- homemakers are entitled to compensation if they are not able to work
- calculated based on what the claimant would have earned and not what
the claimant could have earned
-AKA in Quebec this is referred to as Pre-Trial Pecuniary Loss
-Represents actual expenses resulting from the injury from the date of loss to the date of trial
-Divided into:
a) Loss of working capacity - incurred loss of earnings
- homemakers are entitled to compensation if they are not able to work
- calculated based on what the claimant would have earned and not what
the claimant could have earned
b) Cost of Care - out-of-pocket expenses for health-related issues
- fees incurred for any medical or quasi-medical services, like acupuncture or
physiotherapy
c) Damage to Property - examples are ripped or soiled clothing, broken glasses, and
other items that
may have been damaged in the loss
may have been damaged in the loss
2. Future Loss of Working Capacity
-Refers
to less tangible losses
-Losses
that are anticipated to happen because of injury
-Includes
loss of earnings and profits
-Includes
loss of homemaking capacity and loss of shared family income
3. Future Cost of Care
-Costs that have yet to materialize for medical expenses
-Includes cost for post-accident living environment
-Divided into:
a) Capital Expenses
- One-time expenses like wheel chair or reconstruction of the home
b) Ongoing Expenses
- Services required on a regular basis like attendant care
- Lump sum settlement is grossed up when taxation is expected to cut into the award for this expense
-Costs that have yet to materialize for medical expenses
-Includes cost for post-accident living environment
-Divided into:
a) Capital Expenses
- One-time expenses like wheel chair or reconstruction of the home
b) Ongoing Expenses
- Services required on a regular basis like attendant care
- Lump sum settlement is grossed up when taxation is expected to cut into the award for this expense
4. Non-Pecuniary Damages
- Damages which cannot be calculated with any mathematical precision
- Includes subsections like:
a) Pain & Suffering
- distress caused by physical injuries
- includes any nervous shock experienced by the claimant and ways in which
that shock may reasonably affect the claimant's future living condition
b) Loss of Amenities
- physical or emotional affects because of injuries due to accident experienced
by the claimant
- affect of physical or emotional injuries on the range of normal activity and
enjoyment of life for the claimant
- examples - inability to participate or enjoy sports, hobbies, or pursuit of an
occupation
c) Loss of Expectation of Life
- compensates for an anticipated shortened life span
- includes: loss of pleasure of living
claimant's anguish because their lifespan has been shortened
d) Aggravated Damages
- award when tortfeasor intentionally caused the claimant to suffer as a result of
their misbehaviour
- examples - humiliation, indignity, degradation, shame or indignation
e) Care, Guidance and Compassion
- legislation allows certain relations to sue for the loss of care, guidance and
companionship which was expected if the claimant was not injured
- applies more to fatalities or if the claimant survives but is permanently and
seriously injured post-loss
-persons who qualify for this type of damage are:
- Damages which cannot be calculated with any mathematical precision
- Includes subsections like:
a) Pain & Suffering
- distress caused by physical injuries
- includes any nervous shock experienced by the claimant and ways in which
that shock may reasonably affect the claimant's future living condition
b) Loss of Amenities
- physical or emotional affects because of injuries due to accident experienced
by the claimant
- affect of physical or emotional injuries on the range of normal activity and
enjoyment of life for the claimant
- examples - inability to participate or enjoy sports, hobbies, or pursuit of an
occupation
c) Loss of Expectation of Life
- compensates for an anticipated shortened life span
- includes: loss of pleasure of living
claimant's anguish because their lifespan has been shortened
d) Aggravated Damages
- award when tortfeasor intentionally caused the claimant to suffer as a result of
their misbehaviour
- examples - humiliation, indignity, degradation, shame or indignation
e) Care, Guidance and Compassion
- legislation allows certain relations to sue for the loss of care, guidance and
companionship which was expected if the claimant was not injured
- applies more to fatalities or if the claimant survives but is permanently and
seriously injured post-loss
-persons who qualify for this type of damage are:
·
Spouse
·
Children
·
Grandchildren
·
Parents
·
Grandparents
·
Siblings
-
Relational
Harm
- in common law this type of legal action allows for surviving family members
like spouse, children, grandchildren, etc (refer to list above), to recover
award from the tortfeasor
- in common law an action dies when the victim dies but expenses like, funeral, travel,
treatment for injured person, nursing for injured person, loss of income are recoverable against the tortfeasor by the surviving family members of the claimant. The award for damages will be limited to the contributory negligence of the injured person
- in common law an action dies when the victim dies but expenses like, funeral, travel,
treatment for injured person, nursing for injured person, loss of income are recoverable against the tortfeasor by the surviving family members of the claimant. The award for damages will be limited to the contributory negligence of the injured person
-
In Quebec there are no restriction as to
who can sue for injuries caused by a wrongful act. The person needs only to prove that a
"recognizable" injury and the causal link between the injury and the
fault exist
Structured
Settlements
-
There are generally two (2) ways to
finalize a claim, and that is paying a lump sum in return for a release from
all further claims or by making periodic payments through a structured
settlement
-
A final release will detail which one of
the two methods will be chosen
-
Structured
Settlements - financial package designed to meet specific
future payment requirements; includes periodic payments either for a fixed
period or for the life of the injured person;
includes a lump sum payment to pay for medical expenses, lost wages,
special equipment, lawyer's fees and other out-of-pocket expenses already
incurred
-
Benefits and components of a structured
settlement are:
·
Funded by a trust or annuities
·
Provides series of payments made over
time
·
Provide long term medical care payments
·
Guarantee a continuous income for a long
time
·
Annuities / trust earns interest which
saves insurer on settlement amount and guarantees claimants will get their
money when they need it
·
Savings for the insurer can range from
10% to 30%
·
Removes for the injured party the stress
of investing and controlling lump sum payment themselves
·
Periodic payments provide a secure
regular income; however, payments are
inflexible and does not allow the claimant the ability to invest in other
financial products that could yield greater returns
-
Structured settlements are not
appropriate for all claims
Resolving
Bodily Injury Liability Claims
-
It is unwise to admit liability even
when the decision to pay a claim has been initiated. This allows the insurer to have more
flexibility at a later date to argue that the claim was not the result of the
insured's negligence should negotiations break down and the case goes to court
-
Once the investigation is complete and
the insurer determines there is no obligation under the policy to pay, then the
claimant and insured will be notified of this decision in writing
Releases
for Bodily Injury Claims
-
Final release is the final document in
the life of a claim; it signifies the
closure of the claim presented by the claimant and requires the claimant and
witness to sign it; a witness should be
independent of the claim.
-
The circumstances where a release can be
overturned by the courts are:
·
Settlement was grossly unrealistic
·
Injured party needed legal advice but
did not obtain it
-
The adjuster must not take advantage of
the claimant's susceptible position, and must provide full and proper
explanation of the significance of the release
-
The differences when settling a claim
with a minor are the following:
·
Minor (person under the age of 21 yrs)
signs a release it is not binding;
minors are protected by contract law due to their vulnerability
·
Negotiations are undertaken with the
minor's parents / guardians and not with the minor themselves; parents / guardians need to sign an
indemnifying agreement which promises to use funds for the benefit of the minor
·
Parents / guardians promise to indemnify
the insurer if the minor should make a claim when they reach the age of
majority (or 21 yrs old); however, there is a chance that the parents
/guardians don't have the economic means to indemnify the insurer when the
minor presents a claim upon reaching the age of 21 yrs old
-
In Alberta, public trustee is appointed
to look after interests of the minor whether the action is litigated or not
-
For minor injury claims involving minors,
the trustee will review medical reports to determine if the settlement offer is
adequate. If it is then the trustee will
send a letter to the parents/guardians advising the offer is adequate. If it is not then the trustee will recommend
what is a reasonable settlement
-
If the matter can't be resolved then the
courts will decided the appropriate settlement
-
In Ontario the process is as follows:
·
Judicial approval is required for
settlements in all cases involving minors
·
Any settlement made must be approved by
a judge in order for it to be binding;
if the judge doesn't approve of the settlement then it is not binding
·
The courts use a "friendly
action" which involves the following steps:
v Statement
of claim issued on behalf of the minor
v Settlement
approval given by government officer (official guardians/public trustees) who
will be responsible for protecting vulnerable claimants
v Appearance
entered on behalf of the insured
v Lawyer
for minor and lawyer for the insured must appear before a judge
v Judge
will find the settlement proper and will produce the judgement accordingly
v Settlement
funds are paid into the court, except out-of-pocket expenses, and held into
trust by government officer until the minor reaches the age of majority
-
In Quebec, settlements are resolved
using the family council which is made up of parents and grandparents
-
Settlement funds are paid to members of
the family council
Other
Policies
-
The insured should notify the insurer if
s/he has an umbrella liability policy or an excess policy
-
For an automobile claim, if the policy
limits are exceeded, the umbrella policy may provide extra coverage for any
amount greater than the original policy limits
-
Example;
While driving his 1999 Oldsmobile, John collided with a pedestrian. The pedestrian succumb to his injuries and
the living family members sued John. The
legal action presented against John was in the amount of $1.5 million, but
John's auto policy had liability limits of $1 million. John had a residential policy with an
umbrella rider for an additional $1 million.
The umbrella rider will be enforce for any amount greater than the
original policy; auto policy will cover
$1 million and the umbrella will cover the remaining balance of $500,000
Apportioning
Defence Cost
-
The loss adjuster would be concerned
with apportioning defence costs when:
·
Funds are not recoverable under the
insurance policy
·
Coverage under the policy is not
necessarily straight forward
·
Insurers have to defend actions
completely and then try to recover costs (or portions of the defense costs)
when the claim is resolved; the insurer
can use the courts to try and apportion costs with its insured
·
Most claims are settled outside of the
courts and the insurer will NOT have the opportunity to apportion the defense
costs