Published In: Insurance Law Newsletter – 11.Aug.20 August 11, 2020

Case Summary: Beware of special costs when denying insurance coverage

Special costs were not awarded in a case involving wrongful denial of insurance coverage but the Court confirmed that they are available in exceptional circumstances in the interests of justice.

Insurance law – Medical travel insurance – Breach of good faith – Damages – Special damages – Punitive damages – Costs – Special and increased costs

Stewart v. Lloyd’s Underwriters, [2020] B.C.J. No. 722, 2020 BCSC 669, British Columbia Supreme Court, April 30, 2020, B.J. Norell J.

The insurer was found to have wrongfully denied coverage for medical expenses under a travel insurance policy. Punitive damages were awarded for breach of the insurer’s duty of good faith. The insured sought special damages. The Court confirmed that special damages can be awarded in exceptional circumstances in the interests of justice, such as ensuring insureds have access to justice. However, in this case the insured was not relying on insurance funds for income for the necessaries of life, the insured had the means to retain counsel, and the insured was not out-of-pocket for the health care expenses. The insured’s circumstances did not rise to the level of exceptional and warranting special costs. The insured also sought special costs on the basis of litigation misconduct but the Court did not agree that there was evidence of active concealment of information in the course of the litigation to warrant special costs. The insured was awarded party and party costs at Scale B.

This case was digested by Dionne H. Liu, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Dionne H. Liu at