A BC court ruling has opened the door for a homeowner to claim psychiatric injuries caused directly by his insurer's denial of a property damage claim.
The decision, filed on February 18, 2026, in Young v. Gore Mutual Insurance Company, 2026 BCSC 262, is one that property and casualty insurers across Canada may want to keep on their radar.
Frank and Tammy Young own a home in Campbell River, British Columbia, next to a property owned by Ryan and Karriann Pyne. Water leaks from the Pyne property in August 2019 and October 2020 allegedly caused damage to the Young home. The Youngs turned to their insurer, Gore Mutual Insurance Company, to cover the cost of repairs. Gore Mutual refused.
The Youngs filed claims against both the Pynes and Gore Mutual in March 2023. At the time, the case looked like a straightforward property damage and coverage dispute. That changed in August 2025.
While preparing Frank Young for his examination for discovery, the Youngs' lawyer, Steve Allardice, learned for the first time that Mr. Young had been suffering from psychological and psychiatric injuries - anxiety, depression, substance use disorder, and aggravation of PTSD - which he attributed to Gore Mutual's denial of his claim. Records showed that Mr. Young had reported increasing substance use to a psychiatrist as early as July 2021, linking it to the coverage denial. By February 2022, he was reporting fear of losing his home.
The Youngs then sought to amend their claims. Against Gore Mutual, they alleged that the denial of coverage and the breach of the duty of good faith under the policy caused Mr. Young's psychiatric injuries. Against the Pynes, they alleged the property damage itself caused the same harm. Mr. Young claimed general damages including non-pecuniary damages, special damages, and cost of future care.
There was a catch. The limitation period for these new claims had expired no later than February 17, 2024.
Gore Mutual pushed back, arguing it would lose an accrued limitation defence and that its ability to defend the action would be impaired. The Pynes took a similar position.
Associate Judge Harper was not persuaded. The court found the new claims were not doomed to fail and were closely connected to the existing action, which already included allegations of aggravated and punitive damages tied to the coverage denial. The court also noted that Mr. Young would reasonably likely tender expert evidence on his mental health and substance use issues regardless of the amendment.
With the trial adjourned to February 22, 2027, the court found there was ample time for further discovery and independent medical examinations, and no actual prejudice to either defendant. The limitation defence was not preserved. The Youngs were ordered to pay both defendants' costs of the application given the admitted errors.
The real question - whether Gore Mutual can be held liable for psychiatric harm flowing from a coverage denial - remains unanswered until trial. But the fact that a court has cleared the path for that claim to be tested should give claims teams and underwriters something to think about.
