Insurance law – Automobile insurance – Homeowner’s insurance – Subrogation – Right of insurer to subrogation – Policies and insurance contracts – Unnamed insured – Multiple policies – Apportionment and contribution of claim
Rochon v. Rochon,  O.J. No. 5788, November 6, 2015, Ontario Court of Appeal, J.M. Simmons, G.J. Epstein and G.I. Pardu JJ.A.
The plaintiffs’ insurer, Grenville, who insured the plaintiffs’ house pursuant to a residential home owner’s policy, brought a subrogated claim against the plaintiffs’ son. The defendant son negligently started a fire at the plaintiffs’ house, where he resided. The fire occurred while he was working on his car. He held an automobile insurance policy on the car through Economical. From a practical perspective, the suit was a contest between Grenville and Economical over which insurer bears the ultimate responsibility for the fire loss. The trial judge dismissed the action on the basis that Grenville was not entitled to subrogate against the defendant because he was an unnamed insured under the homeowner’s policy.
The Court of Appeal upheld the dismissal. First, the policy language made it clear that the defendant was an unnamed insured under the homeowner’s policy. The fact that the defendant, as an unnamed insured, did not have a right to sue Grenville under the policy did not make the defendant any less an unnamed insured. Second, the Court also found that the defendant had an insurable interest, which was based on his keeping his contents and tools on the premises, as well as the inseparable connection of his interests with those of his parents as a dependent living in their home. Additionally, there were powerful policy reasons why insurers should not be permitted to subrogate against their own insured. The fact that an insured may have other insurance is irrelevant because a suit by an insurer against its own insured does not fulfill the aims of subrogation, which is to avoid overpayment of the insured. Furthermore, subrogation against an insured should be barred because the insurer has contracted to take onto itself the very risk at issue, thereby taking it away from the insured.
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