BMO may investigate $300,000 life-insurance claim before paying, Manitoba court rules

BMO Life Assurance Company may reasonably investigate a $300,000 life-insurance claim before deciding whether to pay it, a Manitoba judge has ruled. The decision does not find that anyone committed fraud or finally deny the beneficiary the policy proceeds.

In Fishman v. BMO Life Assurance Company, 2026 MBKB 128, Justice Rempel of the Court of King’s Bench of Manitoba held on September 18, 2026, that providing the statutory proof of a life-insurance claim does not prevent reasonable inquiries into whether the policy can be challenged for civil fraud.

The insurer’s additional right to require answers from beneficiary Leon Richard Fishman depended on an information-gathering authorization in this particular policy. The judge expressly declined to decide whether every life-insurance contract gives an insurer the same entitlement.

A discrepancy prompted further questions

The policy was issued to Fishman’s wife on March 23, 2017, naming him as beneficiary. She died in December 2024. All premiums had been paid and the policy remained in force.

Fishman supplied proof of death and the other information required to establish his claim. But a subsequent claimant’s statement raised a discrepancy: the insurance application had denied marijuana use during the preceding five years, while his statement reported use extending over more than 20 years.

BMO sought more information about that history. Through counsel, Fishman refused to provide further information, withdrew previously granted information-collection consents and demanded payment. He maintained that Manitoba’s Insurance Act did not require him to answer additional questions as a condition of receiving the death benefit.

The parties brought the legal questions to court under Rules 21 and 22 on an agreed statement of facts. This was a determination of how the legislation and policy operated, not a trial deciding whether the discrepancy amounted to fraud. The reasons do not find that cannabis use itself invalidated the insurance or caused the insured’s death.

Two-year protection did not eliminate the fraud exception

Because the policy had been in effect for more than two years during the insured’s lifetime, the Act’s incontestability protection applied. Under section 161(2), a failure to disclose or a misrepresentation does not make a policy voidable after that period in the absence of fraud.

BMO accepted that it could avoid paying the proceeds only if it established civil fraud. The dispute was whether it could investigate that possible defence before paying, and whether it could insist that Fishman answer relevant questions.

Fishman relied on section 180, which requires an insurer to pay within 30 days after receiving sufficient evidence of four matters: the insured’s death and age, the claimant’s right to receive the money, and the beneficiary’s identity and age. Both sides agreed that he had supplied that evidence.

He argued that those straightforward requirements were a complete proof-of-claim process. Once they were met, the insurer had to pay or formally deny the claim within the statutory period rather than postpone its decision by demanding more information from him. He did not dispute that an insurer could investigate fraud, but argued it should use independently obtained information or voluntary disclosures.

BMO responded that payment presupposed a valid and enforceable contract. It argued that the Act preserved a fraud defence and could not sensibly require payment before a reasonable investigation of that defence.

Proof of a claim and enforceability were different questions

Rempel distinguished the evidence needed to advance a claim from the insurer’s ability to challenge the underlying policy. Meeting section 180’s evidentiary requirements triggered the statutory payment process, but did not settle every issue about enforceability.

The judge rejected Fishman’s proposed requirement that an insurer either pay or formally deny the claim within 30 days. The text speaks of payment, Rempel explained, and does not expressly impose that alternative decision deadline.

But the court also rejected BMO’s assertion that section 180 applies only to uncontested claims. It applies whether the insurer ultimately accepts or disputes liability. The insurer’s success therefore did not remove disputed claims from the statutory scheme.

Reading the surrounding provisions together, Rempel found a distinction between disputes about proof or the recipient’s entitlement and disputes about whether an enforceable policy existed. The Act provides different court processes for resolving proof questions, paying money into court and determining its distribution. That broader context supported an implied requirement that payment under section 180 rest on a valid policy, even though the section does not say so expressly.

The judge also gave an alternative reason for reaching the same result: section 180 does not expressly prevent investigation of the civil-fraud defence preserved elsewhere in the Act. Requiring payment before the insurer had a reasonable opportunity to investigate would substantially undermine that exception.

The authority to require answers came from the contract

The further question was narrower. BMO acknowledged that the Act contains no specific provision requiring claimants to answer the kind of follow-up questions it had asked Fishman.

Instead, the court relied on item 6 of section 13.1 of the insurance application, which formed part of the policy. That clause authorized BMO and its agents to obtain information about the insured for risk assessment or evaluation of a claim.

Unlike a separate medical authorization in the application, this clause had no time limit and expressly covered claim evaluation. Rempel concluded that it allowed BMO to seek relevant information and insist on responses from third parties, including the beneficiary, before completing its assessment.

The questions about marijuana use were reasonably connected to the apparent discrepancy between the application and the claimant’s statement. The court’s conclusion depended on those contractual terms and circumstances, not a general statutory power to compel answers from every beneficiary.

Consumer protections remain relevant

Rempel accepted that consumer protection and prompt payment are important purposes of the legislation, and that the statutory proof requirements should be straightforward. Those purposes protect claimants from unreasonable, oppressive or unnecessary demands, but do not prohibit reasonable inquiries into potential fraud and policy validity.

The ruling permits BMO to investigate before determining whether payment is required; it does not endorse unlimited delay or unrestricted questioning. Civil fraud still must be proved to avoid payment under this policy.

The $300,000 is the policy benefit in dispute, not damages or a court-ordered payout. The reasons leave the ultimate entitlement unresolved. No costs amount was fixed: if the parties cannot agree, they may return to the judge with further submissions.