A personal liability umbrella policy contained in the standard “Option “W”” endorsement which provides $1 million of uninsured automobile coverage does not stack or augment existing automobile insurance policies to provide coverage of a loss greater than $1 million

Suchan v. Casella, [2005] O.J. No. 4740, Ontario Superior Court of Justice

Ms. Suchan was injured seriously in a motor vehicle accident. She commenced an action against the owner and operator of the vehicles involved for damages in excess of $2 million. Both of the motor vehicles were insured under insurance policies with $1 million of third party liability coverage. Ms. Suchan also commenced an action against State Farm under her own personal liability umbrella policy. This policy contained a standard Option “W” endorsement which provided Ms. Suchan with $1 million of uninsured automobile insurance. As Ms. Suchan was seeking damages in excess of $2 million, she wanted to look to her own insurer for satisfaction if her damages at trial exceeded the $1 million dollar third party liability coverage of either, or both, of the owner/operators of the two vehicles involved in the accident. Ms. Suchan commenced an action against State Farm Automobile Insurance Company (“State Farm”) for a declaration that she would be entitled to this coverage.

The Court examined the Option “W” provision. It concluded that the purpose of the provision was to protect the Insured and provide protection from an underinsured liable party. On a plain reading, Option “W” provides Ms. Suchan with coverage, where a liable party’s coverage is less than the $1 million. A trilogy of Ontario cases in the late 1980’s and early 1990’s dealt with the issue of whether Option “W” coverage could stack on top of third party liability insurance: Torrance v. Torrance et al [1989], O.J. No. 1412; Despotopoulos v. Jackson, [1991] O.J. No. 1472; and Holmes v. Jarrett, [1993] O.J. No. 679. In each of these cases, the Court concluded that insurance provided under the Option “W” provision did not stack on top of third party liability insurance. Ms. Suchan relied upon the decision of the Ontario Court of Appeal in Keelty v. Bernique, [2002] O.J. No. 83 as authority for the proposition that this trilogy had been overruled.

McMahon J. noted that he did not agree that the obiter in the Keelty case changes the law set out in the trilogy of cases, Torrance, Despotopoulos, and Holmes, supra. He noted that the terms of Option “W” were clearly defined in the policy, and Ms. Suchan had no entitlement to claim for coverage under the Option “W” provision unless the liable party or parties had less than $1 million of insurance coverage. Ms. Suchan’s action against State Farm was dismissed.

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