Life Insurer Failed to Establish Fraud in Application Completed by “Big Drug Dealer.” The court rejected the life insurer’s plea that the insurance policy was void ab initio (void from the beginning) due to the applicant’s non-disclosure of a prior criminal conviction. The insurer clearly thought they had a good case to deny this claim: most notably because they believed they had some good evidence that the applicant was a big drug dealer who deliberately withheld his prior assault conviction, and who was, according to media reports, being targeted for assassination, which seemed to come to fruition when the applicant was found dead with bullet wounds. But the court rejected the insurance company’s theory, mainly because the “evidence” was weak: comprised on hearsay, and based on documents that were open to many different interpretations. With that, the court was unable to conclude that the applicant lied, or was attempting to commit a fraud against the insurance company. When coupled with the fact that the policy was in force for over five (5) years, the incontestability clause, which states that “except for nonpayment of premiums, …(the insurer) …will not contest the Basic Plan after it has been in force during the Insured’s lifetime for 2 years from the Policy Date”, would require fraud to be established, which the insurer could not satisfy on a balance of probabilities.
Costanza v. Desjardins Financial Security Life Assurance Company, 2022 ONSC 432
https://www.canlii.org/en/on/onsc/doc/2022/2022onsc432/2022onsc432.html