By: Faiza Tariq, Associate


Abbas v Esurance Insurance Company of Canada[1] establishes a bright-line rule under section 554(1) of the Alberta Insurance Act (the “Act”). The Alberta Court of Appeal found that to deter insureds from making willfully false statements in support of a claim, the giving of a fraudulent statement in respect of one claim bars the insured from recovering for any other claim arising out of the same underlying event. The insured, Mr. Abbas, forfeited both his claims arising from the same event and insurance policy, when he willfully made false statements in support of one of the claims. The court noted that although its ruling might seem draconian, taking a strong stand on this issue was necessary to deter fraudulent claims and to ensure respect for the duties of good faith an insurer and insured owe each other.


Mr. Abbas was injured while a passenger in a vehicle operated by an uninsured driver. He submitted claims to his insurer, Esurance Insurance Company of Canada (“Esurance”), under two sections of his policy: the income replacement benefit section (the “IRB”) and the standard endorsement form provisions available for insureds injured in an accident caused by an uninsured driver (the “SEF”). Mr. Abbas admitted that he lied in his IRB claim, including by falsifying a hiring letter. Esurance rejected both the IRB and SEF claims, maintaining that Mr. Abbas forfeited his right to all coverage arising out of the accident, due to the false statements made in support of the IRB claim.

Lower Court Decisions

After being sued by Mr. Abbas, Esurance applied for summary judgment. A Master dismissed Esurance’s application, holding that it would be “patently unfair” to reject the SEF claim when the subject matter of the fraud was related only to the IRB claim. On appeal, a judge of the Alberta Court of King’s Bench found for Esurance, explaining that severe sanctions were justified, to deter claimants like Mr. Abbas from filing false proofs of loss and Mr. Abbas also breached the duty of good faith he owed to Esurance.

Alberta Court of Appeal’s Decision

(i) Insurance Act, Section 554(1)

The Alberta Court of Appeal cited section 554(1) of the Act, which stated:

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.

Mr. Abbas admitted that the lie he made in his IRB claim qualified as both “fraud” and a “false statement” under section 554(1). The court considered the purpose of this section, which was to codify the common law applicable to fraudulent coverage claims. Under the common law, an insured who willfully makes a false statement (or otherwise engages in fraud) with respect to one claim made under an insurance policy forfeits all claims made under that policy and arising out of the same underlying event.

(ii) Interpretation of “claim” in section 554(1)(c)

Mr. Abbas argued for a narrow interpretation of “claim” as it appears in section 554(1)(c) of the Act, claiming that his requests for coverage under the IRB and SEF provisions were two separate claims. Since his employment status was not relevant to his eligibility for the SEF benefit, section 554(1) did not apply to that claim. Esurance argued that because the IRB and SEF claims arose from the same accident and under the same policy, they collectively qualified as a “claim”. The court accepted Esurance’s position, as this was consistent with the common law principle of deterring fraudulent claims that this section codified. The court held that an insured should not be allowed to think: “if the fraud is successful, then I will gain; if it is unsuccessful, I will lose nothing.”

(iii) Relevance of Materiality to Section 554(1)

Mr. Abbas relied on three British Columbia cases, which stand for the proposition that a willfully made false statement only vitiates an insured’s claim if the statement is material to that particular claim. Esurance denied that materiality had any relevance under section 554(1) of the Act.

The court explained that although section 554(1) of the Act includes a materiality requirement, it was not as broad as Mr. Abbas suggested. To rely on section 554(1), an insurer need only show that a false statement and/or fraud is material to one of the claims made by the insured under the policy following a particular underlying event. At that point, the false statement and/or fraud will vitiate all claims arising out of that event. As an example, the court explained that if an insured had his valuables stolen while he was out to dinner, and then lied about who he was having dinner with, the claim may not be vitiated by the fraud. The insurer would have to prove that the subject matter of the fraud (i.e., the identity of the insured’s companion) was relevant to one of the claims being made.

The court held that these harsh consequences apply regardless of whether the insured’s fraud prejudices the insurer directly.

The court explained that these principles have been applied in other jurisdictions, such as Ontario and Manitoba.


Section 554(1) of the Act establishes a bright-line rule where an insured willfully makes a false statement in support of a claim. Not only does the section grant the insurer the right to refuse the claim that relates to the false statement, but the insurer may also refuse any other claims made under the policy that arise from the same underlying event. Section 554(1) codifies the common law principle of deterrence. While it may seem draconian, according to the Alberta Court of Appeal, it is necessary to deter insureds from gaining any benefit from fraud or willfully made false statements.

On the other hand, there is a clear difference in how some provinces such as British Columbia have chosen a more liberal interpretation of their similarly worded counterpart to section 554(1) of the Act while Ontario and Manitoba have followed Alberta Court of Appeal’s strict interpretation.

This decision reiterates that when submitting a claim, it is important to consider all applicable statutes. It is always good practice for insureds to avoid exaggerating their losses, even for part of a claim. Abbas indicates that an insurer who fails to take this to heart may forfeit all claims arising out of a particular event.


[1] 2023 ABCA 36.

Faiza Tariq is an associate at Theall Group LLP and is developing a broad commercial litigation practice. Prior to joining Theall Group LLP, Faiza articled at a prominent litigation boutique in downtown Toronto. During her articles, Faiza worked on a class action, cross-border IP litigation, employment law disputes, real estate litigation and commercial disputes, including assisting with a complex trial on the Commercial List. She also wrote an article entitled ‘Municipalities Do Not Owe a Duty of Care to Developers to Protect Their Economic Interest During Rezoning Application Process’ which was published in the Ontario Bar Association’s Real Property Law section.

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