Insurer Owes Duty of Good Faith, but Not Fiduciary Duty

March 11, 2014 | Amelia M. Leckey

Garneau v. Industrial Alliance 2014 ONSC 1495

Ms. Garneau was approved for LTD benefits.   She then took a medical retirement.  Her LTD insurer was not aware that Ms. Garneau began to receive a medical retirement pension, which was an off-set under the LTD policy.  Her insurer learned of the pension five years after Ms. Garneau began to receive it.  As a result there was an over payment of LTD benefits in excess of $114,000.  The insurer reduced the amount of LTD benefits it was paying to Ms. Garneau to recover the overpayment.  Ms. Garneau commenced an action seeking, among other things, damages for breach of fiduciary duty.  The insurer brought a summary judgment motion seeking to have the action dismissed. 

The decision deals with several issues, but on the issue of whether the insurer owed Ms. Garneau a fiduciary duty, Justice Smith relied on the Ontario Court of Appeal decision in Plaza Fiberglass v. Cardinal Insurance, [1994] 18 O.R. (3d) 633, and held the insurer was not in a fiduciary relationship with Ms. Garneau, “but rather in a relationship of an insurer and an insured and owed…a duty of utmost good faith.” 


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