Top Canadian Insurance Rulings From 2017

In 2017, there were a number of Canadian court rulings that will have an impact on the landscape of insurance litigation in the years ahead. Here is a run through of some of those key decisions, and a few lessons insurers can draw from them.

1. Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7

   In this landmark case, the Supreme Court of Canada held that future Canada Pension Plan (CPP) benefits couldn't be deducted from the amount an insurer must pay out under a standard form contract that indemnifies insureds for any shortfall in the payment of a judgment for damages against an underinsured person who committed a tort. The insurer was arguing that its policy allowed amounts recoverable under "any policy of insurance providing disability benefits" to be deducted from any amount payable by the insurer. It took the position that CPP benefits constituted a "policy of insurance." But an insurer cannot rely on its specialized knowledge of jurisprudence to advance an interpretation that goes beyond the clear words of the policy, the Supreme Court ruled. An average person applying for additional insurance coverage would understand a "policy of insurance" to mean an optional, private insurance contract and not a mandatory statutory scheme such as the CPP.

2. Desjardins Financial Security Life Assurance Company v. Émond, 2017 SCC 19

   A Supreme Court of Canada ruling in which the top court confirmed that the exclusion for participation of the insured to any indictable offence, in a life insurance policy, does not apply to hybrid offences - namely those the Crown may choose to prosecute either as a summary conviction offence or as an indictable offence. In Quebec, insurers may not draft a general exclusion stating that indemnity will be removed for violation by the insured of any law. However, insurers are allowed to assert broad exclusions for indictable offences. Here, the insured died while fleeing the police in a high-speed chase, which is a hybrid offence. The Supreme Court confirmed that the exclusion, as drafted, should be construed narrowly and applied only to more important offences that may be prosecuted only as indictable offences. The Quebec Court of Appeal had recognized that an insurer can exclude hybrid offences from coverage but must do so explicitly.

   3.6916643 Canada inc. c. Intact, compagnie d'assurances, 2017 QCCA 660

   The Quebec Court of Appeal refused to grant leave to appeal in a decision that denied indemnity to the insured of an all-risk policy. The insured was a company specialized in...