More Ontario auto insurers named in $1B legal action over allegedly withheld HST

Lawyers file series of class action lawsuits against Ontario’s large auto insurance companies
WATCH ABOVE (Nov. 1): Lawyers led by Paul Harte announced on Thursday that they are filing a series of class-action lawsuits against big auto insurance companies in Ontario like Belairdirect and Allstate, for malpractice on accident benefit compensation. The claim also calls out the Financial Services Commission of Ontario, an agency watchdog for the industry, for turning a "blind eye" to these unfair insurance practices.

A total of 11 Ontario auto insurers have now been named in proposed class-action lawsuits alleging they short-changed accident victims by ignoring rules surrounding the payment of sales tax.

On Nov. 1, lawyers representing individuals who have made claims announced legal action against six insurance companies in Ontario.

Since then, statements of claim have been filed against an additional five insurers, The Co-operators, Echelon, The Commonwell, Wawanesa and Economical.

WATCH: Ontario automotive insurers sued, alleged they didn’t pay HST

Ontario automotive insurers sued, alleged they didn’t pay HST
Ontario automotive insurers sued, alleged they didn’t pay HST

The lawyers allege that insurance companies have withheld sales tax paid on goods and services in their clients’ medical claims in some cases, or included the HST paid as part of a cap on benefits.

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“The issue is that insurance companies are deducting HST from benefits, or put another way, they’re including HST in the calculation of limits to benefits,” said Paul Harte, one of the lawyers behind the lawsuits.

The statements of claim allege the conduct goes against direction from the provincial regulator and amounts to a violation of the insurers’ duties not to engage in unfair and deceptive practices.

The statements also accuse the Financial Services Commission of Ontario, which oversees the insurance industry, of failing to enforce its guidelines.

READ MORE: Lawyers launching court actions against auto insurance companies in Ontario

None of the allegations have been tested in court. In order for the class-action lawsuits to proceed, they would require the permission of a judge, a step known as certification.

Three of the five companies newly named in the suits did not immediately respond to a request for comment on Tuesday. Two insurers, The Commonwell and Economical, declined to comment.

Collectively, the value of damages sought in the claims is roughly $1 billion, Harte said. Lawyers are also seeking an injunction to stop the practice.

The claims cover the period since 2010, when HST was instituted in Ontario. Harte said with 60,000 people injured in auto accidents each year, several hundred thousand people may have been affected.

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READ MORE: Private member’s bills aim to end auto insurance postal code ‘discrimination’ in Ontario

Earlier this month, the lawyers announced legal action against six insurers, Aviva, Intact, Belair, Allstate, Unifund and Certas.

Harte said they have received a strong response on the issue since then.

“Our phone lines have been inundated, essentially, and the website,” he said. “So we are hearing from a number of people who are really concerned about this practice and who didn’t know that their insurance companies were including HST.”