Insurance Law – May 4

Accident and Sickness Insurance - Accidental paralysis – Expectation test N/A

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  The insured's injuries were not caused by an accident, by rather by a disease
  
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  There was a clear distinction in precedent establishing the difference between accident and disease
  
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  Being bitten by a mosquito and contracting West Nile virus was not within the ordinary meaning of the term accident.
  

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  The appellant suffered an accident for which he was entitled to coverage under the policy.
  
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  At the time, while mosquito bites were common, there had been no reported cases of the West Nile virus in Ontario.
  
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  The appellant engaged in work, without intending to cause himself harm, and the harm that did result could not reasonably have been foreseen or expected.
  
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  The injuries were caused by an external source, namely a mosquito. This fell within the ordinary definition of an accident.
  

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  The insured’s loss is not covered by the policy.  The interpretation of insurance policies should avoid unrealistic results that would not have been contemplated by the insured and the insurer when they entered into the policy agreement.  The word “accident” is an ordinary word to be interpreted in ordinary language as it would be understood by the average person applying for insurance. 
  
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  Accident insurance is not comprehensive health insurance and it is evident that the parties in this case did not expect the policy to cover all loss or bodily injury. 
  
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  TM is an unexpected consequence of genital herpes that occurs rarely but it is a normal incident or consequence of the disease.  Since the transmission followed the normal method by which sexually transmitted diseases replicate, the bodily injury proceeded from natural causes. 
  
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  Contrary to the inference sought by the insured through reference to Martin, there is no necessary equivalence between “unexpected” and “accident”. Accordingly, this test is unhelpful when it comes to consequences of a disease.
  
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  If such transmissions were classified as accidents, then an accident policy would become a comprehensive health policy despite the substantially lower premium. 
  
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  The onus is on the claimant to show that the loss is covered by the policy.  However, once the claimant leads evidence sufficient to establish a prima facie case that the bodily injury was caused by an “unlooked-for mishap or an untoward event which is not expected or designed”, the tactical burden then shifts to the insurance company to displace the prima facie case by some evidence that the bodily injury is not an accident but its “antithesis”, namely, the result of a disease picked up in the ordinary course of events. 
  
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    The burden of proof however, remains squarely with the plaintiff. 
    

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  STRONGLY criticizes Kolbuc
  
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  policy here covers "bodily injury sustained by external, violent, and accidental means, without negligence"
  
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    question here was whether the bodily injury (paralysis) resulted from an external means
    
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    basically said that this did not fit the definition of an accident
    
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      it was simply a natural tragedy that occurred through the development of disease in the "ordinary course of events"
      
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    the problem wasn't that Gibbens engaged in a dangerous activity - nothing to do with 'courting the risk' (remember, CML doesn’t care about this)
    
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      there is always uncertainty and risk involved with living life (insurer can't escape paying out based on uncertainty and 'courting risk' by the insured)
      
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  insurer also, however, cannot be held as assuming the type of risk that paying out every case of disease would entail
  
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  the chain of events must be started by an 'accidental' cause to keep the possibility of an accident claim open
  
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  herpes was a sexually transmitted disease that Gibbens contracted in the normal course of events
  

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  An insurer never insures the intentional fault of the insured. 
  
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  In the context of a life insurance contract, the suicide of the insured during the first two years of the coverage (art. 2532) and an attempt on the life of the insured by the owner of the insurance contract (art. 2559) are the only intentional acts
  
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  Thus, in this case, act committed by an insurer was not an intentional act
  
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  The principle of public order that “no one may profit from his or her own crime” exists in Quebec insurance law. 
  
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  While this principle prevents the insured or the person entitled to receive the insurance indemnity from profiting from his or her own crime, insurance law does not preclude the protection of innocent third persons or beneficiaries from the consequences of criminal activity.
  
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  To prevent innocent third parties from recovery, the insurance contract must contain a clause specifically providing that the insurer is not required to pay the indemnity if the insured dies in the commission of an indictable offence. 
  
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    Art. 2550 CCLC cannot be used by the insurer to deny recovery to an innocent third party
    
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    Cannot be set up against the beneficiary causes of nullity / foreiture that have purely personal with the insured
    

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  suicide
  
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  attempted homicide against the life insured
  
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  thus, in life insurance, we are generally not considering 'intentionality' - only exceptions are cases of suicide and attempted homicide
  
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    this is opposed to accident insurance, where intentionality is important, or in property/liability insurance, where intentionality is always relevant
    
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  idea of intentionality in life insurance was debated in Goulet
  
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    Quebec Court of Appeal initially said that CCQ 2464 (dealing with intentional acts - found in the damage insurance section) could also be applied to life insurance
    
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      SCC said that this was totally wrong (prof also finds this wrong!!!!)
      
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      remember that this was in the early 1990s and the new CCQ was still being figured out in its legal application
      
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  Madame Goulet was the widow and beneficiary of the life insurance proceeds from her husband's policy
  
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    he died when a car bomb he was planting at Dorval airport accidentally exploded and killed him
    
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    he didn't intend to die
    
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      and even if there had been an exclusion clause in the policy excluding suicide, it wouldn't have mattered because the policy had passed the 2 year maximum exclusion period for Quebec
      
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    there was no clause in the insurance contract precluding payment of indemnity if insured died in the commission of a crime
    
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      does death in the commission of a crime negate the possibility of receiving indemnity on public policy grounds?
      
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        triggers the public policy stance that 'no one can benefit from his/her own criminal activity'
        
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    Madame argues that there was no clause preventing payment of indemnity while committing crime
    
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    insurer counters this by saying that such a clause was unnecessary, since public order already prohibited such types of payouts
    
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      the objection to this, however, is that the innocent beneficiary (Madame Goulet) was not involved in the commission of the crime - she didn't trigger the event, and it would thus be against public order to deprive the innocent beneficiary of an indemnity payout
      
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        this type of public policy was laid out in Mutual of Omaha v. Stats
        
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      we thus have a case of competing public policies
      
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        again, insurer can avoid liability by including a clause that excludes payment of indemnity if death occurs during commission of a crime (subject to the limits of CCQ 2402)
        
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          CCQ 2402 says that insurer cannot exclude payment of proceeds relating to crime, except in cases of indictable offenses
          
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            drug trafficking would be an indictable offense, but drug consumption would not be
            
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    after a lot of discussion of the CCQ, and consideration of whether CCQ 2464 applied to life insurance (decided that it didn't), the SCC determined that an insurance company needed to have a clause specifically preventing payout to innocent beneficiaries if death of insured occurs in commission of an indictable offense
    
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    look at CCQ 2453 - insurer in Goulet tried to use this article to prevent beneficiary from benefitting from proceeds of crime
    
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      however, court says that we don't punish the beneficiary for getting the proceeds of the insurance policy, which are NOT the proceeds of crime
      
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      remember 'principle of dual patrimonies'
      
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        where there is a designation on the insurance policy of a beneficiary, the proceeds are paid to the beneficiary directly
        
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        otherwise they are paid to the estate of the deceased, which is the continuation of his/her patrimony
        
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        THIS BEGS AN IMPORTANT QUESTION: if the insurance proceeds are triggered by death of the insured during commission of a criminal act, and they are supposed to go to the estate of the insured, can the indemnity be paid, considering that he cannot benefit from the proceeds of crime?
        
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          this question is considered in the Oldfield case
          
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          it is clear that there are creditors who stand to gain/lose depending on a payout into the estate
          

Accident and Sickness Insurance

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  TJ held that deliberate acts of ordinary living, such as turning one's neck during a basketball game, fell within the definition of an accident under the Insurer's policy. He further held that no person in the position of Guillet would reasonably expect that turning one's neck during a basketball game would result in an injury of the nature suffered by Guillet, and therefore, was an accident within the meaning of the policy.
  
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  There was sufficient evidence for the TJ to make this inference on a balance of probabilities
  

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  If you qualify the injury as the stroke, then it is the body’s natural reaction, and it is not an accident leading to indemnity
  
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  Wang - cannot give a bodies’ natural reaction the designation of accident.
  

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  Binnie [Gibbons para 57] cannot take in isolation an event to find an accident; one has to look at the entire chain of events as Martin told us to do.
  
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  Reinforces the position that ordinary everyday events can nonetheless constitute accidents giving rise to bodily injury.
  

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  Ordinary everyday events can nonetheless constitute accidents giving rise to bodily injury and indemnity under accident insurance