Court finds direct writer didn’t explain optional benefits properly, but dismisses action against Meloche Monnex

The Ontario Superior Court has found that a direct writer breached its duty of care in offering optional benefits to a consumer. Nevertheless, the court dismissed the claim against Meloche Monnex because it found the claimant would not have purchased the optional benefits anyway.

The case concerns an auto accident that occurred in May 2007. It does not address optional benefits offered under the reformed Statutory Accident Benefits Schedule (SABS). Under the new SABS, implemented in 2010, a wider array of optional benefits is available to consumers.

In Zefferino v. Meloche Monnex Insurance, the plaintiff in the case, Nicola Zefferino, was a named insured under a policy offered by Meloche Monnex. His wife, Sabina Zefferino, was an employee of the TD bank, which qualified her to purchase insurance from the defendant.

Court evidence indicated that on three separate occasions between 2003 and 2004, call centre representatives of Meloche Monnex offered optional benefits that might have increased Zefferino’s statutory minimum income replacement payment of $400 per week to $600, $800 or $1,000 per week. Each time the offer was refused, twice with the notation “not needed.”

But Zefferino initiated a legal action against Meloche Monnex, arguing that he would have purchased the benefits had they been better explained to him.

The court found Meloche Monnex did not meet the standard required by the SABS in “offering” the optional benefits.

“If an offer in the form of a simple solicitation of interest is all that is required, there would be no breach of the defendant’s obligation in this case,” the court found. “If however, a more purposive approach to the legislation is applied, the defendant may need to take a more detailed history and then ensure that the customer understands the optional coverage, its cost, whether it might apply in the customer’s particular circumstances and what the consequences could be for failure to secure the additional coverage.

“In effect, the question boils down to whether or not the defendant must offer the optional coverage in such a way that the customer can make a fully informed decision about what to purchase.”

However, even though Meloche Monnex did not meet this standard of care, the court dismissed the action. The court observed that the plaintiff’s history with four other insurers in the 10 years leading up to the purchase of the Meloche Monnex insurance in 2003 undermined his claim that he would have purchased optional benefits had he known more about them.

“The plaintiff and his spouse purchased insurance from four other insurance companies during the 10 years before relationship with [Meloche Monnex] began,” the court found. “There is no evidence that anything other than basic coverage was secured on any of those prior occasions.

“The choice of securing insurance through the defendant was based on price.”