An insured failed to disclose that she had been receiving marriage counselling from a psychiatrist when she answered a questionnaire on an application for disability insurance. This was a material non-disclosure which entitled the insurer to void the policy.
Facts: The insured was a physician in general practice. In the spring of 2006 she began to have marital difficulties and contacted a group which provided support to physicians who required counselling. The insured had a number of sessions with two psychiatrists.
In the fall of 2006 the insured applied for disability insurance and, in a telephone interview, answered “no” to a series of questions as to whether she had consulted a physician, psychiatrist or counsellor for any reason. She also completed a written form which stated that she had not been examined by any physician or other health care practitioner since completing Part 2 of the application.
In 2008 the insured was hospitalized with severe depression. She made a claim under her disability insurance which was denied on the grounds that she had failed to disclose the fact that she had consulted a psychiatrist in her insurance application.
At trial, the insured said that she had consulted the psychiatrists in 2006 solely for marital counselling and not for health reasons. She interpreted the questions on the application to refer only to consultations for health reasons. The trial judge found that the insured’s answers had been truthful according to her understanding of the questions and allowed the claim. The insurer appealed.
Held: The trial judge erred by considering the subjective understanding of the insured of the questions on the application. The law is clear that an applicant for insurance must make full disclosure of all known material facts. Materiality is considered from the point of view of the insurer. The opinion or belief of the insured is irrelevant.
Materiality is ordinarily a question of fact but in this case the trial judge erred in law by considering irrelevant evidence as to the opinion or belief of the insured. This error allowed the Court of Appeal to review the factual findings of the trial judge on the standard of correctness.
The questions on the application were clear and required the insured to disclose her consultations with the two psychiatrists. They were also material as an insurer would have declined coverage if they had been answered correctly.