Contractual Interpretation of “United States of America” Included the Virgin Islands

The court applied the doctrine of contra proferentum to construe the ambiguous term “United States of America” and found that this term included the United States Virgin Islands.

TD General Insurance Co. v. Baughan, [2013] O.J. No. 1327, March 8, 2013, Ontario Superior Court of Justice, E.M. Macdonald J.

The insured was a passenger in a motor vehicle involved in an accident in the United States Virgin Islands. The insured had an automobile insurance policy issued by the insurer, including an endorsement for underinsurance coverage. The insured claimed against the insurer for both statutory accident benefits and underinsurance coverage. The insurer applied to deny coverage on the basis that the accident occurred outside of the territorial limits pursuant to the Insurance Act, R.S.O. 1990, c. I.8, the Statutory Accident Benefits Schedule – Effective 1, 2010, O. Reg. 34/10, the OPCF-44R Endorsement, and/or the Ontario Automobile Policy (“OAP1”).

The territorial limits for third party liability coverage and statutory accident benefits pursuant to the Insurance Act are “Canada, the United States of America and any other jurisdiction designated in the Statutory Accident Benefits Schedule”. The Statutory Accident Benefits Schedule provides benefits for “accidents that occur in Canada or the United States of America…”

The court found the term “United states of America” was “inherently complex and ambiguous” and set out a list of territories or combination of territories that this term could be referring to. An assessment of the grammatical and ordinary sense of the “United States of America” was inconclusive. The court considered the objective of the Schedule and held it was remedial and consumer protection legislation. Accordingly, “United States of America” should be interpreted in an inclusive manner. A consideration of the legislative intent of the term “United States of America” was inconclusive. The court then applied the doctrine of contra proferentum to the OAP1, the Insurance Act, the Schedule and the Endorsement to resolve ambiguity of “United States of America” in favor of the insured.

This case was digested by Djuna M. Field and edited by David W. Pilley of Harper Grey LLP.

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