Insurer Had no Duty to Defend Estate of Intoxicated Boat Operator

The insured, who had blood alcohol limit three times the legal limit, was killed in a motor boat accident which also injured the passenger. The insurer had no duty to defend or indemnify the insured’s estate in the action brought by the passenger as there was no contractual obligation to defend, and the duty to indemnify was excluded because the motorboat was “operated illegally”.

Insurance law – Liability insurance – Marine insurance – Policies and insurance contracts – Interpretation of policy – Duty to defend – Exclusions – Illegal acts – Ambiguity

Heffernan Estate v. Lloyd’s Canada, [2015] O.J. No. 599, February 10, 2015, Ontario Superior Court of Justice, E.P. Belobaba J.

The insured, who had a blood alcohol level three times the legal limit, crashed his motor boat into a dock, killing himself and injuring his passenger. The passenger sued the insured’s estate. The insurer refused to defend or indemnify the insured’s estate in the action brought by the passenger. The estate brought this application for a declaration that the insurer was obliged to defend and indemnify the insured’s estate.

Unlike most liability policies, the policy only contained an agreement to indemnify. Consequently, the court stated that there was no duty to defend as there was no contractual obligation to do so. The insured argued a duty arose from a provision titled ‘Limit of Liability” which mentioned a “duty to settle or defend”. The court disagreed and held that the language of the provision clearly granted the insurer the discretion to defend or settle where it was appropriate to do so. The court acknowledged that there was a measure of ambiguity about the provision, but was satisfied that no contractual duty to defend arose on a reading of the provision as a whole.

The court further held that there was no duty to indemnify because the liability of insurer to do so was excluded where the insured vessel was “operated illegally”. The court acknowledged that the words “operated illegally” were imprecise and ambiguous as they covered too many possible infractions. For example, a person in a boating accident could have breached a boating regulation that was unrelated to the actual operation of the boat, like a regulation requiring the lettering on the boat’s hull to be of a certain font and size. However, the court stated that there was probably no better example of “operated illegally” than the present situation and no insured could reasonably think otherwise.

This case was digested by Michael J. Robinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at or or review their biographies at

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