When a number of Insureds sought to recover under the terms of a Family Protection Coverage Endorsement (“FPCE”), additional coverage for injuries caused by uninsured motorists, the fact that an eligible Insured as defined in the endorsement is jointly liable with the uninsured motorist, does not affect other eligible Insureds’ entitlement to claim under the Endorsement. In this case not seeking to recover damages against one insured person resulted in creating coverage that the insured would not otherwise be entitled to under their insurance policy.
Gostick (Litigation guardian of) v. Squance (Litigation administrator of), 2007 ONCA 674, Ontario Court of Appeal, D.H. Doherty, J.C. MacPherson and E.A. Cronk JJ.A., October 4, 2007
A van driven by the Insured, Colleen Morrison, collided with a vehicle driven by Mr. Squance, who was killed. Ms. Morrison, her two sons, and her husband were seriously injured. Mr. Squance was uninsured. For the purpose of this proceeding, it was agreed that Mr. Squance was entirely responsible for the accident and that Ms. Morrison was negligent in not ensuring that her son, Travis, was wearing his seatbelt at the time of the accident. Ms. Morrison’s negligence contributed to Travis’ injuries.
The Insurer accepted that by virtue of Ms. Morrison’s negligence, it was responsible under the liability coverage provisions of its policy for Travis’ damages up to the $1,000,000 limit in the policy. Travis was very badly injured and it was assumed that his damages would exceed $1,000,000. However, he did not claim any entitlement to further recovery from the Insurer under any part of the policy. The dispute was between the Insurer on one side and Ms. Morrison, her husband, and her other son on the other. These Insureds all suffered serious injuries in the accident and Mr. Squance was the only person who had any liability to them for their damages. The Insureds looked to their policy for coverage. Specifically, they claimed to be entitled to recover under the terms of their FPCE, which was attached to their policy. This Endorsement had a $1,000,000 limit. There was no dispute that the Insureds were all eligible “Claimants” and “insured persons” under the definitions of the FPCE. It was also accepted that Mr. Squance fell within the definition of an “inadequately insured motorist” for the purpose of the FPCE coverage.
The FPCE extended the coverage provided for in the main policy by giving the Insureds the same financial protection the Insureds would have if the at-fault driver had insurance in the same amount as the limit of the FPCE purchased by the Insureds. The Insurer took the position that the $1,000,000 in liability insurance available to Travis under Ms. Morrison’s policy had to be taken into account in determining its maximum liability under the FPCE. The Insurer contended that Ms. Morrison was jointly liable with Mr. Squance for the injuries of Travis and that for the purpose of the Endorsement, Travis was an eligible Claimant and Insured as defined in the FPCE, even though he had advanced no claim under that Endorsement. On the Insurer’s interpretation of the Endorsement, its maximum liability was $1,000,000 (the limits of the FPCE) minus $1,000,000 (the amount of motor vehicle liability insurance available to Ms. Morrison, a jointly liable motorist), for a net potential liability of $0. The Insureds’ calculation began with the same $1,000,000, that is, the limit of the FPCE coverage. The Insureds contended, however, that only the amount of Mr. Sqaunce’s liability coverage ($0), and not Ms. Morrison’s liability coverage ($1,000,000), should be deducted from the $1,000,000. The Insureds argued that Ms. Morrison was not “jointly liable” to the Insureds and that any liability coverage available to her in respect of Travis’ injuries was relevant in assessing the Insurer’s maximum liability to those specific Insureds.
The Court found that the Insurer’s approach to this Endorsement required that all Insureds under the policy who suffer bodily harm in the accident be treated as a group for the purpose of considering its maximum liability, even if one or more of the Insureds does not seek indemnification. The Court found that the endorsement imposed a single limit on the cumulative amount of the claims advanced by different Insureds who suffered injuries in the same accident. The maximum liability applies to the total claims made by the Insureds and not the individual claims. The Court could not find anything in the language of the Endorsement that would require that joint liability to an Insured who does not seek recovery can serve to reduce the maximum liability of the Insurer to those Insureds who do seek recovery. On the specific language of this Endorsement, the Court found that the question was not whether the Insurer’s policy has responded to claims under the liability provision in the policy, but whether any Insured under the policy was jointly liable for the damages suffered by the Insureds who are seeking coverage under the Endorsement. On the facts of this case, no Insured seeking indemnity under the FPCE was jointly liable to the Insureds.
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