Avoid Turning The Mishandling Of A Claim Into A Six-Figure Bad Faith Award

A Manitoba court decision ordering the province’s public auto insurer to pay a bad faith award of $350,000 serves as a cautionary tale to the industry that bad faith awards for mishandling a claim can be made even after a settlement is reached, according to legal experts from Clark Wilson LLP.

In November 2020, Manitoba Public Insurance (MPI) was ordered to pay a claimant a bad faith award of $348,248, which matched the amount the public auto insurer paid out to settle the claim.

The court found the insurer had improperly denied the claimant her benefits for roughly nine years.

‘Ensure a fair and timely settlement,’ Raman Johal and Erin Barnes of Clark Wilson LLP urged in a recent blog post, Bad Faith Claims Against Insurers–Recent Cases Of Note.

‘Take into account any potential mishandling when reaching a settlement amount in order to avoid bad faith claims. Ensure comprehensive drafted releases accompany any settlement agreement."