Law360 Canada ( December 19, 2024, 9:54 AM EST) -- Appeal by Jeweler's Mutual Insurance Co. (Jeweler's Mutual) from trial judge's award of punitive and compensatory damages in favour of the respondents. Jeweler's Mutual issued a policy to the respondents insuring six pieces of jewelry valued at $502,100. Later, the respondents filed a proof of loss, claiming the jewelry was stolen while they were in Vietnam. The appellant investigated but did not pay the claim, questioning the respondents' ownership of the jewelry. The respondents sued for the insured amount and punitive damages. Although Jeweler's Mutual did not allege misrepresentation in obtaining the policy, it argued the respondents failed to prove ownership of the jewelry before the policy was issued. The trial judge found that the respondents owned the jewelry and awarded $502,100 in compensatory damages for the loss, plus $45,000 in punitive damages. The trial judge held that Jeweler's Mutual accepted the respondents' ownership when it issued the policy and could not defend the claim based on lack of pre-policy ownership proof. In doing so, Jeweler's Mutual attempted to impose an uncontracted obligation which amounted to bad faith. On appeal, Jeweler's Mutual argued that there was no legal basis for punitive damages as insurers could inquire about insurable interest at the time of loss. It also challenged the compensatory damages calculation, stating the policy allowed paying actual cash value instead of replacement value....