Wawanesa denies Ontario family's car insurance claim — now they owe C$26,000. Why you need to read a policy’s fine print

Recent data from the Canadian Council of Insurance Regulators (CCIR) shows that only 3.5% of automobile insurance claims across small, medium and large insurance companies were denied in 2024, according to the CCIR’s Annual Statement Market Conduct Report. Compared to previous years, claim denial rates have remained quite stable — they only increased 0.2% between 2022 to 2024.

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Common reasons insurance claims may be denied

In the same report, the CCIR collected data on reasons why automobile claims were rejected.

Across all sizes of insurance companies that offered the automobile policy, the majority of claims were denied due to exclusions and limitations in the policy, issues not covered under the policy in question, as well as “other” reasons. The “other” category is a mixture of reasons offered by insurers, including: duplicate claims made under the policy, missing or incomplete documentation and claims not being covered under policy terms.

Other common reasons insurance companies can deny a claim, according to legal experts, include:

• Not paying premiums: If you miss any payments and a policy is cancelled before a collision, your claim could be denied.
• Misrepresentation or concealment: Failing to disclose or misrepresenting a material fact that affected the insurer’s underwriting decision (e.g. saying you only use your vehicle for personal driving when you actually use it for ridesharing or business purposes).
• Breach of contract: Not complying with explicit requirements laid out in the policy (e.g. breaking the law while driving).
• Problems with the claim: This could include waiting too long to report an accident or failing to provide photos, a police report or other requested information.

What to do if an insurance claim is shut down

As the Mirzas’ story shows, facing an automobile insurance claim denial can generate significant stress and financial difficulty. If you feel like you have a winning case, here are some steps you can take to combat the defeat.

• Start with an appeal. Each insurer should have an internal appeal process for any claims that are denied — this should be given to you upon delivery of the claim denial notification. Completing an internal appeal is typically a good first step. However, be mindful that an appeal process will likely involve rigorous argumentation — you’ll need to make a case with evidence and logic as to why the denial is not appropriate. Consider reaching out to a consumer advocacy group or legal professional for help with preparing for an appeal.
• File a complaint. Separate from the appeal process, if you believe the insurer has not handled the matter fairly, you can file an internal complaint, typically through their website. Make sure to have all the key policy details on hand first. If you want advice on the complaint made, reach out to the General Insurance OmbudService (GIO) for a review.
• Take legal action. If you believe the denial is unfair, or that the insurer acted in bad faith, you can sue the insurer with the help of a lawyer. In some cases this can be a last-ditch effort due the cost and effort it takes to go through a legally adversarial route.
• Reach out to a regulator. Should internal processes not produce a desired result, another option is to contact the insurer’s regulator – the government body that oversees its actions. The Financial Consumer Agency of Canada has a helpful list of various insurance regulators across Canada concerned consumers can contact for help.