The relationship between an insured and the insurer is primarily legislated and contractual and typically, is understood to require good faith performance. The Supreme Court of Canada affirmed the common law reciprocal duty of utmost good faith which requires an insurer to deal with its insured’s claim fairly, both with respect to the manner in which it investigates and assesses the claim and to the decision whether or not to pay it. See Fidler v. Sun Life Assurance Co. of Canada,  2 S.C.R. 3
The question raised in this article is whether the duty of utmost good faith incorporates a duty of confidentiality. This question is most evident when there is a “collision” (pun intended) in the investigations from different legal regimes relating to a serious car accident such as insurance and criminal law. Law enforcement investigations and insurers’ investigations have different purposes; there are separate legal regimes regarding what each may do in the course of their investigations, and the information required to be divulged by an insured driver or owner to an insurer is different from what is required to be divulged to law enforcement. More significantly, since information provided by an insured to their insurer is not admissible against them in a criminal regime, if insurers were to be free to provide insured’s statements to law enforcement officers, the relationship between the insured and the insurer would be adversarial and insured persons would approach the insurance regime as an extension of the criminal law regime.
In Barata v. Intact Insurance Company, 2021 ABQB 419, the insured Diana Barata and her then fiancé Daniel Barata, were in Ms. Barata’s vehicle when it struck and injured Mr. Vandamme. Although the Baratas stopped and spoke to Mr. Vandamme’s companions, they subsequently left the scene without waiting for the police or an ambulance to arrive. Mr. Vandamme initially survived the collision but he later died from his injuries. The police assumed Mr. Barata was the diver of the insured vehicle. They arrested and charged him with impaired driving causing death and several other criminal offences.
When the insured reported the collision to her insurer, she advised the insurer that she had been driving the insured vehicle, not Mr. Barata. The insurer’s employee volunteered that information to the police and they subsequently charged Ms. Barata with failing to stop, provide her name and address, and offer assistance to the deceased. Some of the charges against Mr. Barata were withdrawn, the Baratas were tried separately and they were each acquitted. The insured alleged that the insurer breached duties it owed to her when they disclosed the contents of their investigation and conversation to law enforcement.
Should an insured have an expectation of confidentiality regarding any information they provide to the insurer as part of its own investigation? The answer is “it depends”. Dunlop, J. found that there is no duty of confidentiality as regards information mandated to be provided by an insured to the insurer. It however had a duty of utmost good faith and in order for there to be a finding of a breach of the duty of good faith by the insurer, it must have acted in some way without reasonable justification. Dunlop, J. found that the insurer and its employee breached a duty of good faith when they disclosed the contents of their investigation and conversation with the insured to the RCMP because that disclosure was not reasonably justified as part of the Insurer’s investigation of Ms. Barata’s insurance claim.
Among other things, Dunlop, J. found that the Personal Information Protection Act does not authorize an insurer to disclose an insured’s compelled statement to the police in the circumstances because doing so undermined Ms. Barata’s right to remain silent.
Notwithstanding the foregoing, since the disclosure did not result in any damages to Ms. Barata because the police did not rely on the information from the insured in charging Ms. Barata. She was not charged until months later following Mr. Barata advising the police in a recorded telephone call that Ms. Barata was the driver and following further investigation by the police.
The insurer’s duty to investigate an insured’s claim in utmost good faith is said to include what it does with the information the insurer obtains during that investigation, and that it breaches that duty if it acts without reasonable justification. It appears then, that while there may be no stand-alone duty of confidentiality, it may be considered as part of the duty of utmost good faith in certain circumstances. While there may be cases where an insurer would be reasonably justified in disclosing some or all of its insured’s compelled statement to the police, there must be reasonable justification for such disclosure and such a determination is on a case by case basis. Where an insured makes a purely gratuitous disclosure to law enforcement, which does nothing to further the insurer’s investigation, it would be a breach of the insured’s duty of utmost good faith to the insured.