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Insurance Coverage/Exclusions

(Aug 2019)

S.239 Insurance Act liability coverage, is not intended to cover ‘negligent parenting’ where the defendant was, fortuitously, an occupant of the automobile in which the injured plaintiff was a passenger. So says the C.A. in a very interesting recent decision. Per extracts:

[5] ..

239 (1)..insures..every other person who..is an occupant of, an automobile owned by the insured..against liability imposed by law upon..that other person for loss or damage, (a) arising..directly or indirectly from the use or operation of any such automobile;..

[6] ..Even though Amealia’s injuries arose from the use of a vehicle, Mr. Hunt’s liability for her loss or damage does not. His liability is alleged to arise from negligent parenting, not from anything he did or did not do as an occupant connected to the use or operation of the automobile.

[7] ..Nor can the plain language of section 239 be overcome by the fact that the Insurance Act is consumer protection legislation, or that policies should be construed in favour of coverage.

Hunt v. Peel Mutual Insurance Company, 2019 ONCA 656 (CanLII), <http://canlii.ca/t/j1zh1>

(May 2019)

If it discovers that an applicant had made a misrepresentation, is an automobile insurer entitled to rescind the policy ab initio on common law grounds?

Here’s what a recent C.A. decision had to say:

[40] …the legislative policy requiring all vehicles that operate on Ontario highways to be insured is to protect innocent victims of automobile accidents, and to provide some statutory accident benefits to everyone who is involved in an accident…

[41] …If an insurer were permitted to rescind an insurance contract at common law ab initio, a person who believed they were operating a vehicle with insurance could have that contract rescinded with retroactive effect, putting the person in automatic contravention of the Compulsory Automobile Insurance Act…which is clearly inconsistent with the intent of the legislature.

[42] The termination and renewal provisions of the Act and regulations provide notice periods to allow an insured…opportunity to obtain alternate coverage when they receive notice that their insurance is going to be terminated or not renewed…so that they can take steps to bridge any gap in their coverage…

Merino v. ING Insurance Company of Canada, 2019 ONCA 326 (CanLII), http://canlii.ca/t/hzzpq

(Mar 2019)

BI claim against a homeowner by her longtime tenant daughter. Usual liability coverage exclusion for claim by ‘person residing in your household.’

Q: What if that resident also historically performed chores? A very recent decision explores the availability of the “residence employee” exemption to that exclusion…and decides that it does not apply in this case:

[30] Betty had lived there for 61 years and had always paid rent from the time she graduated from high school….Elizabeth never had a specific list of duties for Betty; she testified that Betty could do what she wished at any given time and that when Betty’s health was poor, she did not do any tasks at all…..

[31] There was no written contract between Elizabeth and Betty concerning work that Betty was to do. There was never a schedule propounded for doing specific work. Betty was not paid for the work she did at the house. She was not issued a T4. Elizabeth never submitted any documentation relating to Betty with respect to Employment Insurance, Canada Pension Plan benefits, or Workplace Safety and Insurance Board premiums…..

Traders General Insurance Company v. Elizabeth Gibson, 2019 ONSC 1599 (CanLII), http://canlii.ca/t/hxzgl

(Mar 2019)

What happens when an insured holds two policies – one CGL, the other homeowners – each of which will respond to the same incident? How is coverage to be apportioned, where each policy states that it is “primary insurance” yet also contains an identical “other insurance” clause?

A very recent decision tells us that the answer lies in identifying the nature of the risk each policy is primarily covering:

[17] The Applicant’s policy and the Respondent’s policy each provide primary coverage for different risks – the Applicant’s policy applies to Patel’s business and premises and the Respondent’s policy applies to Patel’s household and person. Accordingly, and in accordance with the guidance provided by the Supreme Court of Canada in Family Insurance and the Court of Appeal in McKenzie, the “other insurance” provisions of those policies are inapplicable.

The two policies may overlap somewhat but they are not identical. They therefore are on par with each other and share coverage between them rather than one standing behind the other as excess insurer.

Royal & Sun Alliance Insurance Co. v. Intact Financial Corp., 2019 ONSC 1339 (CanLII), http://canlii.ca/t/hxq9w

(Feb 2019)

Many people likely know about the tort principle, “who is my neighbour?” How about, though, the insurance principle, who resides “in my household?”

A homeowner’s policy of insurance typically provides coverage to the homeowner’s relatives “while living in the same household” as the homeowner.

Q.: Can a relative be living in the insured’s home, and yet not be living in the insured’s “household” for liability coverage purposes?

A recent Court of Appeal decision provides the answer (hint: it’s not just about residence)…

Ferro v. Weiner, 2019 ONCA 55 (CanLII), http://canlii.ca/t/hx6w8

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