January 11, 2005

Material Misrepresentation Voids Insurance Coverage

In W.H Stuart Mutuals Ltd. v. London Guarantee Insurance Co. the Ontario Court of Appeal held that a fidelity insurance policy covering theft by employees through electronic transfer was void for misrepresentation in the insurance application. The insured had stated that the principals of the company signed each cheque. The company had in fact changed to a computerized cheque generating system which created a computerized facsimile of the principals signature. The Court held this was a material misrepresentation. The Court also commented that the trial judge was in error in applying a subjective test to the issue of the insured's duty to disclose. The Court stated that there must be an objective element to the test. The material misrepresentation voided the policy and the insured was not entitled to indemnity under the policy. 8:52:22 PM    comment []  trackback []

		November 17, 2004

Claims Made Policy, Not Surprisingly, Requires a Claim to be Made

In The Jesuits Fathers of Upper Canada v. Guardian Insurance of Canada, the Ontario Court of Appeal considered the issue of the duty to defend under a claims made policy. The policies provided coverage for claims that were "first made against the insuted during the policy period". The Court adopted the statement of the motions judge: "A general understanding of a problem, in the absence of sufficient detail, will not constitute a 'claim' within the policy." 8:58:07 PM    comment []  trackback []

		November 4, 2004

Automobile, Boat and Homeowner Policies: Coverage Issues

The Ontario Court of Appeal addressed the issue of coverage between an automobile, boat and homeowner's policy in Axa Insurance v. Dominion.The insured was attaching a bungee cord to fasten down seat cushions on the boat which was on the trailer, attached to the car. The bungee cord let go, striking another individual in the eye. At issue was which of three policies owed a duty to indemnify or a duty to defend. In considering the auto policy, the court followed Amos v. Insurance Corp. of British Columbia, [1995] 3 S.C.R. 405, wherein Major J. formulated a two‑part test: "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 the appellant’s injuries and the ownership, use or operation of his vehicle, or is the connection between the injuries and the ownership, use or operation of the vehicle merely incidental or fortuitous?" The Court answered yes to both questions and held the auto policy had the obligation to defend and indemnify. The boat insurer conceded that there was coverage under the policy, but relied on the Other Insurance clause in its policy: "If you have other insurance not insured with us which applies to a loss or claim … our 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." The Court held that the boat insurer had no obligation to defend or indemnify, until the underlying auto policy limits were used up. The homeowner's policy had an exclusion for "damage arising from the ownership, use or operation of any motorized vehicle, trailer or watercraft ….". As such, it had no obligation to defend or indemnify. 10:14:06 PM    comment []  trackback []

		October 31, 2004

Insurance Securities Class Actions Rolling In..... According to the SCAS Database, in the two weeks since NY AG Eliot Spitzer filed his complaint against Marsh & McLennan Companies, Inc. and its subsidiary, Marsh Inc., seven companies have been named as defendants in insurance-related securities class actions.... [SECURITIES LITIGATION WATCH] 10:03:26 PM    comment []  trackback []

		October 28, 2004

Recovery From Umbrella Policy Not Deductible From Under Family Protection Endorsement

In Heuvelman v. White the Ontario Court of Appeal concluded that a personal umbrella policy was bit a motor vehicle liability policy.  As such, any monies recovered under the umbrella policy did not reduce the amount recoverable under the Family Protection Endorsement. 10:15:34 PM    comment []  trackback []

Ontario Court of Appeal Considers Duty to Defend Issues

In Halifax Insurance Company v. Innopex Limited, the Ontario Court of Appeal confirmed that the duty to defend will be determined based on the policy wording and the allegations in the claim. Extrinsic evidence should not be considered. The Court reiterated that reference to and reliance on U.S. insurance decisions, where there is little or no Canadian authority, is appropriate in order to "ensure uniformity in the construction of insurance contracts in use in both countries". While a laudable goal, there does not seem to be uniformity within the U.S. on troublesome coverage issues. The Court also had some strong words for the insurer: "I return to the procedure employed by Halifax to bring the duty to defend issue to the court for its determination. It is unfortunate that Halifax adopted a proactive, preemptive strike tactic that resulted in the creation of a substantial record containing considerable extrinsic evidence that diverted the motion judge from deciding the duty to defend issue expeditiously on the basis of the legal principles and test explained by the Supreme Court of Canada in Nichols, Scalera and Monenco. Moreover, it is very disturbing that Halifax followed this procedure in what appears to be a deliberate effort to divert the court from deciding the real issue of whether it had a duty to defend, a result which its own expert believed to be virtually inevitable. When an insured person is sued for a claim that may fall within a risk that is insured, it is essential that he or she know at a very early stage whether or not the claim falls within the coverage, thereby creating a duty to defend, as it is necessary that prompt steps be taken to defend the lawsuit and to forestall default judgment. No doubt this underlies the principle that the duty to defend issue is to be decided expeditiously as a preliminary matter on the basis of the allegations in the underlying litigation read with the insurance coverage. The insurer’s procedure in this case did not result in either an early, or an economical resolution of the issue. Indeed, it has now been more than four years since Halifax commenced its action claiming a declaration that it was not under a duty to defend." 10:07:08 PM    comment []  trackback []

		October 6, 2004

Passenger in Stolen Vehicle Not Covered

In Simison v.Catlyn, the Ontario Court of Appeal held that a passenger in a stolen vehicle is not entitled to claim under the uninsured provisions of the passenger's mother's policy of insurance. 10:03:22 PM    comment []  trackback []

		April 26, 2004

Proposed ISO Changes to Additional Insured Wording

The ISO is proposing changes to the Additional Insured wording.  The intent is to exclude coverage to Additional Insureds for liability arising out of their sold negligence. 9:18:58 PM    comment []  trackback []

Insurer Can Subrogate in its Own Name

In Freudmann-Cohen v. Tran, the Ontario Court of Appeal considered the issue of subrogation in the context of Third Party Claims.  The Insurer was named as a defendant in an action by its own insured under the underinsured coverage (OEF 44) of its policy.  The tortfeasor was a codefendant. The insurer discovered that the tortfeasor had been delivering pizza at the time of the accident.  The limitation period for the plaintiff had expired by this time.  The insurer sought to add the employer as a Third Party to the action.  The employer moved to strike the Third Party Claim, arguing that this was a subrogated claim which the insurer was attempting to pursue in its own name.  The Court of Appeal concluded that the requirement for an insurer to sue in the name of its insured was a procedural rule.  When balanced against the procedural rule for Third Party Claims, the objectives expressed in the rule, "namely, more effective and less costly litigation, and the avoidance of multiplicity of proceedings, should carry the day".  The Insurer was permited to bring the subrogated action in its own name. 9:19:32 PM    comment []  trackback []

© Copyright 2005 Michael Girard.

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