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11 June 2019
In the recent Ontario Court of Appeal case TD General Insurance Co v Intact Insurance Co (2019 ONCA 5), the passenger of a boat sustained injuries when the boat struck the shoreline.
The passenger sued both the driver and the owner of the boat. Two insurance policies were triggered by the loss. The owner of the boat held a TD insurance policy that covered the driver, who was driving the boat with the owner's permission. The driver was also covered by his homeowner's policy, issued by Intact.
The two policies had identical "other insurance clauses", which provided as follows:
If you have other insurance which applies to a loss or claim, or would have applied if this policy did not exist, this policy will be considered excess insurance and we will not pay any loss or claim until the amount of such other insurance is used up.
TD brought an application seeking an order that both insurers were on an equal footing and should share equally in the defence and indemnity of the driver stemming from the passenger's claim.
The application judge dismissed the application and TD appealed the decision.
The Ontario Court of Appeal found that the application judge had erred in its application of the governing authority – the Supreme Court's decision in Family Insurance Corp v Lombard Canada Ltd (2002 2 SCR 695) – and clarified its application in instances of overlapping insurance policies with other insurance clauses covering the same loss.
The court determined that the analysis in instances of overlapping coverage would come down to whether:
The focus of the second issue was with respect to the excess insurance clauses. Since both insurance policies had identical other insurance clauses, the court found that if the claim exceeded the limits of the Intact policy, TD would be the excess insurer. In this way, the limiting obligations of the two policies were found to be irreconcilable and the two insurers had to share the burden equally under a coordinated obligation to make good the loss.
The appeal was allowed and the two companies had to share equally in the defence and indemnity of the driver.
For further information on this topic please contact Meghan Bell at Dentons Canada LLP by telephone (+1 780 423 7100) or email (firstname.lastname@example.org). The Dentons Canada LLP website can be accessed at www.dentons.com.
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