Many financial institutions provide disability insurance to borrowing customers to facilitate payment of debt obligations when disabled. The same rules in tort apply as reviewed above in claims made against the employer for negligence relating to the administration of disability policies.

Such was the finding of the Court of Queen’s Bench in Manitoba. ¹ The plaintiff successfully alleged that the Bank did not advise the plaintiff that her existing disability insurance would terminate when she entered into a consolidation loan.

The Court looked to the Supreme Court of Canada decision ² which held that a public insurer owed an obligation to customers to provide sufficient information to make a reasoned decision as to the appropriate level of automobile coverage. The Court in that case applied the principles of negligent misrepresentation as set out in Hedley Bryne of (1) reliance which was (2) reasonable and (3) reliance was expected.

The court divided the liability to a 60% responsibility to the plaintiff and 40% to the defendants.

Similarly the Ontario Court ³ considered the liability of the insurer due to the negligence of its agent. The agent had represented to the insured couple, who had recently immigrated from Greece, that the policy would provide for the monthly sum of $1,400 which would not be reduced by other benefits. The policy in fact provided a reduction of the benefits sum by other benefits. The court found a duty of care which had been breached.