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death by accident is often part of the life insurance policy / proceeds
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does an individual have to disclose his new found interest in extremely risky activities (i.e. base jumping) after life insurance is formed?
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No. You don’t have to disclose material change in the risk in life insurance. The only thing not known in life insurance is when death will occur, all other factors are factored in at time of formation.
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Under damage insurance, you would disclose (if it was within the control of the insured)
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For individuals to be barred from recovery, they must have an expectation of death.
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Expectation and intention are separate concepts. Even if the act is intentional, as is in most circumstances (think injecting oneself with Demerol, base jumping, etc.), one must also have an expectation of death
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Was the act intentional such that he expected to die?
Transamerica v Oldfield 2002 SCC 22 - CML
Life Insurance – Public Policy – Innocent beneficiary
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Facts: When the respondent and her husband P separated, they agreed that P would maintain sufficient life insurance coverage in lieu of child and spousal support, and that the respondent would be named the beneficiary until their two children became 18 years old. P died while carrying 30 cocaine filled condoms in his stomach. The insurer refused to pay, saying her claim was barred by the public policy principle that a person should not be allowed to insure against his own criminal act.
Issue: Whether beneficiary’s claim barred — Whether public policy precludes recovery by innocent beneficiary where death of insured was caused by his criminal acts.
Held: No. No.
Reasoning:
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It is not against public policy to permit an innocent beneficiary to obtain the proceeds of a life insurance policy where the insured accidentally dies during the course of a criminal act.
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The public policy rule at issue is that a criminal should not be permitted to profit from crime. The rule extends to those who claim through the criminal’s estate.
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The respondent has not asserted her right to the insurance proceeds as a successor of the insured, however, but as an ordinary beneficiary, with the result that her claim is not tainted by any illegality on the part of her husband.
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It is consistent with justice that innocent beneficiaries not be disentitled to insurance proceeds merely because an insured accidentally dies while committing a criminal act. To deny recovery would penalize the victim for the insured’s anti social behaviour.
Concurring (J. L’Heureux-Dube): Absent the forfeiture rule or specific exclusions in the insurance contract, the insurer would have to abide by the insurance contract
Ratio: Innocent beneficiaries are entitled to recover even if insured died as the result of a criminal act. Public policy exception inapplicable in these circumstances.
Comment:
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Court indicates that it might be appropriate to extend this rule to innocent people claiming through the criminal’s estate (and thus removing the bar to recovery through this avenue).
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An innocent beneficiary named in an insurance policy should not be disentitled to insurance proceeds where the insured dies while committing a criminal act and does not intend the loss.
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Insurance Law – May 20
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finishing our talk about automobile insurance
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in QC, there’s a complete bar to a civil action with respect to bodily injury in an automobile
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however, if there is a possibility of taking out private insurance, a civil action against a private insurer is always possible (written in the Code in the same section as above)
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Insurance Act, Ontario
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Interested in art. 239
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239. (1) Subject to section 240, every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,…
Djepic v Kuborovic 32 C.C. L.I. (4th) 17 - CML
Automobile Insurance - Duty to Defend – importance of distinction between auto and non-auto
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F: D and K load a mattress onto the roof of a van. Van belongs to D and he has insurance from Dominion. Driveway/home belong to K and he is insured by Belair. A bungee cord comes loose and strikes D in the eye, causing permanent blindness. D sues K, and K brings this motion against both insurance companies that jointly or severally they have a duty to defend and indemnify. Both insurers deny coverage.
Issues: 1) Is K insured under D’s auto coverage b/c he was an occupant or in possession of the van? (2) Does the claim fall within K’s home insurance exclusion (prohibiting coverage for injuries arising from the use of a motor vehicle)? (2.1) If not, does that insurer have a duty to defend/indemnify?
Held: No. No. Yes.
Reasoning (Rouleau, J.A.):
Auto Insurance
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S. 239(1) of the ON Auto Insurance Act requires auto policies to cover “occupants” of the vehicle. The definition of occupant does not extend to K in the act of loading a mattress; since Milenko was not a driver, passenger or a person getting into or out of or getting onto or off Mijo's vehicle he was not an occupant of the van at the time of the accident and did not come within the definition of an insured person.
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K was equally not in “possession” of the van, as he did not have some measure of control over the van.
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Even a generous reading of the pleadings do not suggest that K was occupying or in possession of the vehicle.
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Dominion accordingly has no duty to defend.
Home Insurance
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Belair has a duty to defend unless the allegations of negligence against K fall w/in the express exclusion provisions for claims arising “out of the ownership, use or operation of a motor vehicle”.
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Finds that it is possible in some interpretations to find the claim does not trigger the exclusion clause, meaning Belair would be liable. This case is based entirely on pleading and does not have the benefit of findings of fact.
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Belair has a duty to defend (duty to indemnify is not decided).
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Distinguishes the facts from Axa v Dominion to find them inapplicable to this case.
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“Where the policy is ambiguous, effect should be given to the reasonable expectation of the parties.”
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In any case, based on the early stage of the proceedings and the pleadings, it could not be determined how the accident occurred. Belair was unable to demonstrate that the claim arose from the use of an automobile.
Ratio: (1) Reasonable expectation of the insured is an important factor in interpreting insurance policies and as such, exclusion clauses are to be interpreted narrowly and the policy is to be interpreted broadly. (2) Duty to defend is broader than the duty to indemnify. (3) In situations where the insured has more than one policy and a reasonable expectation that he or she will be covered, one of the policies will be read to have effect.
Class Notes
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injured person seeking insurance
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D is the plaintiff and the injured party. Owner of the van.
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K is def, and injury happened in his driveway
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D gets struck by bungee cord and loses eye sight.
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Lawsuit against K is for negligence.
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The question is if either of them have any insurance which would allow for compensation for the damage.
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Who has the duty to defend K for the allegation of negligence?
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In a liability insurance policy, there is also an obligation to assume the defense of the defendant by the insurer (duty to defend), as long as there’s a possibility that the liability insurance will be drawn upon
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D has automobile insurance w/ liability. K has homeowner policy w/ liability.
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D has to show that he falls under his insurance policy. Must look at act to decide this, re: 239 Ontario Insurance.
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In the act, occupant means: the driver, passenger, and (c) a person getting into or on or getting out of or off the automobile; (“personne transportée”)
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Many different arguments tried, but no entry point for D in automobile insurance
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What about homeowner policy? There’s an exclusion clause saying that nothing is covered for use and operation of automobile
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Coverage clauses are always interpreted broadly and exclusion clauses are interpreted narrowly in order to preserve as much as possible the coverage avail
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Now, K’s homeowner insurer will have duty to defend as long as he can show that there’s a possibility that K will be liable under this policy. Is there any possible way to construe the incident that had nothing to do with the automobile?
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The way that he attached bungee cord has nothing to do with automobile…
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Bungee cord was defective…
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Courts found that there was a reasonable expectation of the insured of the homeowner policy that his policy might cover this incidence. Thus, there’s a duty to defend.
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Duty to defend is wider than the duty to indemnify
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Defense clause is an integral part of liability insurance. Think about it – the insurer has an interest in making sure that the defense is conducted appropriately.
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K’s insurer brought forth the argument that auto insurance is always interpreted broadly (see Axa, Rossy and so forth). This is to catch many activities under the umbrella of automobile insurance. They argued that this should also be the case here. However, courts rejected this argument saying reasonable expectation requires policy to be interpreted broadly and exclusion to be narrow.
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But you can see there’s some inherent contradiction here
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2503. The insurer is bound to take up the interest of any person entitled to the benefit of the insurance and assume his defence in any action brought against him. Costs and expenses resulting from actions against the insured, including those of the defence, and interest on the proceeds of the insurance are borne by the insurer over and above the proceeds of the insurance.
Axa Insurance v Dominion of Canada General Insurance [2005] I.L.R. I-4346 - CML
Automobile insurance – Interpretation; Excess Coverage
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Facts: WI and SS spent the day in WI's motorboat on a lake. Prior to setting out on the trip to his cottage, WI took steps to secure a hinged vinyl cushion, covering the shaft of the boat's motor, so that the cushion would remain stable during the trip. He took a bungee cord and attached it across the cushion to the port and starboard cleats in the rear of the boat. While he was checking the cord, it suddenly detached from the port cleat, snapped across the boat and struck SS. SS commenced an action against WI sounding primarily in negligence. WI had a standard automobile insurance policy with Axa which insured both the motor vehicle and any trailer attached thereto. Coverage was dependent upon the damages claimed in the litigation arising out of the ownership, use or operation of WI's vehicle or trailer. WI also had a boat liability policy with Dominion which insured both the boat and trailer. Coverage was dependent upon the damages arising out of the ownership, use, operation or maintenance of the boat or trailer. Dominion also had an Other insurance clause which stated that if the insured other relevant insurance, Dominion will only come into force after that insurance has been exhausted. Axa claiming that Dominion’s other insurance clause only applies to indemnity and not duty to defend.
Issue: Whether accident arised out of the ownership, use or operation of a motor vehicle / trailer.
Held: Yes.
Reasoning:
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In determining whether SS's injuries arose from the ownership or directly or indirectly from the use or operation of the WI automobile and/or trailer, the test was: (1) Did the accident result from the ordinary and well-known activities to which automobiles are put? (2) Is there some nexus or causal relationship (not necessarily a direct or proximate causal relationship) between SS's injuries and the ownership, use or operation of the vehicle.
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An "ordinary and well-known" activity for automobiles in Ontario is to transport boats secured to trailers from waterways to homes and cottages.
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As for the causation branch of the test, the securing of a cushion to a boat on a trailer attached to an automobile as a safety precaution necessary to prepare the boat for proper transport on a highway is an activity related to the ownership, use and operation of the automobile and trailer.
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Dominion's excess coverage provision applied to both its duty to defend and its duty to indemnify. Dominion's policy stated that it "will not pay any loss or claim until the amount of such other insurance is used up".
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WI amounted to an attempt to create a distinction, which did not appear in the policy, between a claim for indemnity and a claim for a defence. Therefore, Dominion only liable for excess coverage of duty to defend and indemnity.
Ratio: (1) Standard application of the Amos test. (2) Other insurance clauses for liability insurance include duty to defend and to indemnify, unless indicated otherwise.
Class Notes
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which policy was going to be drawn upon for the compensation for the damages
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two insurers insuring the defendant: Axa & Dominion
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Axa = auto policy for car + trailer
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Dominon =
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boat + trailer policy
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homeowners liability policy
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includes damage to stuff considered to be household related and if you do dumb stuff to other people, w/ exclusion clause with respect to auto stuff
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also had watercraft inclusion but w/ exclusion once again for automobiles
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Dr. Isen = def.
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Dr. Sims = plaintiff – bungee cord hits him in the eye
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Two contenders: Axa = auto policy for car + trailer, Dominon: boat + trailer policy
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Amos Test:
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1) Purpose (an ordinary and well-known activity to automboiles)
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2) nexus or connection (not necessarily direct or proximate) between injuries sustained and the use of a vehicle (unbroken chain of events)
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Therefore, auto insurance applicable.
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Furthermore, Dominon had an ‘other insurance’ clause which means that their policy doesn’t come in effect until other insurance has been exhausted
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