For those lucky enough to have one, most people’s largest asset is their house, and their largest debt is their mortgage. For Canadians in general, and Vancouverites in specific, the cost of housing and the size of mortgages have ballooned to the point where they are some of the highest in the world. With the recent interest rate hikes many British Columbians are worried about being able to meet their mortgage obligations. It is not just a varied market that can stop people from meeting their mortgage payments, quite often an unexpected injury or illness, or even a death can prevent individuals from being able to afford their mortgage payments. Fortunately, there is a type of insurance to deal with these situations: mortgage protection insurance.
What Is Mortgage Protection Insurance Anyways?
Mortgage protection insurance is a type of insurance that responds when an injury or illness disables someone leaving them unable to work and earn the income, they need in order to make their monthly mortgage payments. It can also protect families when the wage earner of the household dies by paying off the balance of the mortgage. These types of policies provide peace of mind for individuals, knowing that should something unexpected happen they won’t lose the roof over their head and their biggest investment.
Why Would My Insurance Company Deny My Mortgage Protection Claim?
Unfortunately, as with all types of insurance benefits, many legitimate mortgage protection insurance claims are denied by insurance companies and no benefits are paid out to the policy holders. This can be disastrous and can result in individuals having to refinance their mortgage or, in extreme cases, sell their house.
There are many reasons why mortgage protection insurance claims can be denied. A common basis for denial is the allegation that the policy holder misrepresented material facts when applying for the insurance in the first place. These misrepresentations could be non-disclosure of pre-existing medical issues, being less than truthful about illicit substance use, or the amount of alcohol consumed. If such facts were not disclosed and would have materially changed the policy holder’s underwriting, an insurance company could use that as a basis for denying paying out benefits under the policy.
Many Mortgage Protection Insurance policies also have exclusion clauses which exclude certain types of injury or illness from coverage. For instance, if you have a medical condition which you were unaware of but did exist before you entered into the policy, if that condition was rendered symptomatic and then lead to a disability, an insurance company could deny coverage as pre-existing illness are almost always excluded from coverage.
One type of denial which occurs more often in mortgage protection insurance denials than in other areas of insurance denials, is insurance broker negligence. Often the mortgage protection insurance is being offered as an afterthought, with the focus of the broker actually being having you sign up for a mortgage. As such, the information gathered for the application for the mortgage protection insurance can often be rushed and recorded incorrectly. If an insurance broker incorrectly records or communicates information for an application for mortgage protection insurance and an insurance company relies on that information and later denies paying benefits under a mortgage protection insurance policy, you can sue the broker in order to recover what you would have been paid under your denied policy.
Unfortunately, once your insurance coverage is denied it is very difficult to make an insurance company change their mind without the assistance of an insurance denial lawyer.
The Advocate Daily
Taylor & Blair LLP was pleased to have been asked to comment on mortgage protection insurance for the Advocate Daily, a Canadian Legal News site, for an expert perspective. The lawyers at Taylor & Blair LLP have significant experience in dealing with mortgage protections insurance denial claims. You can view the Advocate Daily’s article on the topic here.
If your mortgage protection insurance claim has been denied contact the lawyers at Taylor & Blair LLP today as there are strict timelines in which you have to act.