Whiten v. Pilot Insurance: Punitive Damages for Bad Faith

The case

The Whiten family's home burned down on a winter night, and they escaped with almost nothing. Their insurer refused to pay, accusing them of arson, and kept up that position for years even though the fire chief, its own expert and its adjuster found no evidence of arson. A jury awarded $1 million in punitive damages. The Ontario Court of Appeal reduced it to $100,000. The Supreme Court restored the $1 million, finding the insurer's conduct exceptionally reprehensible.

Principles

• Insurers owe their customers a duty of good faith in handling claims, separate from the duty to pay.
• The award should be the lowest amount that will serve the purposes of punishment, deterrence and denunciation.
• Courts consider how blameworthy the conduct was, how vulnerable the plaintiff was, and any harm to them.

In Small Claims Court

Small Claims Court can award punitive damages within its $50,000 limit, but they are rare and must be justified by the conduct. Most claims succeed on compensation for actual losses.

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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.