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An Important Decision for Property and Casualty Insurers: Abbas v Esurance Insurance Company of Canada, 2023 ABCA 36

Brownlee LLP was recently successful in defending a case on behalf of Esurance Insurance Company of Canada that the Alberta Court of Appeal has described as an “important” decision for the insurance industry.

The case involved Ali Abbas, an insured of Esurance who suffered life-altering injuries in a car accident with an uninsured driver. He had had an Alberta Standard Automobile Policy that included an SEF 44 Endorsement for damages caused by an underinsured driver. The insured submitted a claim for coverage for Section B benefits under his policy and for coverage under the Endorsement.

After we reviewed the information Mr. Abbas submitted in support of his Section B claim, it was apparent that he was attempting to commit insurance fraud. Esurance agreed and denied him coverage under both Section B and the Endorsement on the basis that he had violated subsections 554(1)(b) and (c) of the Insurance Act.

Misrepresentation, fraud or violation of condition

554(1)   If


(b)   the insured contravenes a term of the contract or commits a fraud, or

(c)   the insured willfully makes a false statement in respect of a claim under the contract,

a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited.

After his claim was denied, Mr. Abbas dropped his claim for Section B benefits but sued for coverage under the Endorsement.

Under cross examination, Mr. Abbas admitted to having made wilfully false statements, having forged documents, and having conspired with relatives to obtain Section B benefits that he knew he was otherwise ineligible to receive. Based on those admissions we applied to have his claim for coverage under the SEF 44 dismissed by way of summary judgment.  At first instance, the Master dismissed the application on the basis that Mr. Abbas’ fraudulent conduct was only material to his claim for Section B coverage and thus did not cross over to vitiate the SEF 44 claim.

Undeterred, Esurance appealed the decision and won before a Justice who found that properly interpreted, subsections 554(1)(b) and (c) state that if an insured violates any term of their policy, commits any fraud, or willfully makes false statements in respect of any claim under their policy, then any claim by them is invalid and their right to recover any other indemnity is forfeited. Anticipating some criticism that this interpretation may be overly harsh, Justice Johnston emphasized that insureds must advance claims in good faith and that severe sanctions are necessary to deter people from engaging in the type of “reprehensible” conduct as was done by Mr. Abbas.

Mr. Abbas appealed, and the Alberta Court of Appeal dismissed his case, emphasizing that this is an “important” decision for the insurance industry for two reasons.

First, it confirms the proper interpretation of subsections 554(1)(b) and (c) of the Insurance Act, which had not been judicially considered in Alberta under these circumstances.

The Court remarked that the Justice’s interpretation “fits perfectly with the principle that insurance contracts demand utmost good faith from those bound by them and that the legal system must adopt harsh measures to deter fraudsters from exploiting the inherent weaknesses in the insurance contract.”

Second, it confirms that the common-law fraudulent claims rule is still good law:

This is an important insurance case. It declares that the common-law-fraudulent-claims rule – an insurer is relived of the obligation to indemnify an insured for any loss arising from the same event and under the same insurance policy if the insured files a fraudulent proof of loss that is material with respect to one or more parts of the claim whether or not some part of the proof of loss is not tainted by fraud – is still good law in Alberta.

Brownlee was proud to have played a role in this key decision and thankful for the trust Esurance placed in us. We look forward to helping all our clients continue to achieve positive outcomes in the ever-changing legal landscape.


If you have any questions with respect to this bulletin, please contact David Pick at or 403.260.5303.


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