Civil Litigation

Supreme Court awards driver damages in claim against insurer

By Staff

The reverberations of a Supreme Court of Canada decision to award a Nova Scotia man damages in a claim against his insurance company will likely be felt in courtrooms across the Atlantic provinces, says Fredericton litigator Matthew Pearn.

The case involves the interpretation of an excess insurance policy, the SEF 44 endorsement, which kicks in when an underinsured motorist can’t pay the full amount of a court judgment, Pearn, an associate with Foster & Company, tells

Pearn, who was not involved in the case and comments generally, says in Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7 (CanLII), a Nova Scotia man successfully pursued an action against an at-fault driver following a motor vehicle accident and was awarded damages of $465,400 in provincial court.

The man was only able to recover $382,000 from the defendant’s insurer, and subsequently claimed the shortfall of $83,000 from his own insurer under the SEF 44 endorsement of his policy, he explains.

“It’s a family endorsement policy for additional insurance coverage for situations involving an uninsured or underinsured motorist at fault in an accident,” Pearn says.

The plaintiff relied on a clause in the SEF 44 that states insurers are entitled to deduct amounts received from “any policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits.” It argued the man’s future CPP benefits should be considered a “policy of insurance” and, as such, deductible from his claim.

“Their position was that the CPP benefits were compensating him for lost future income, so they shouldn’t have to as well,” Pearn says, noting it’s not uncommon for lawyers to debate contractual interpretations of policies in these types of cases.

He says Justice Andromache Karakatsanis found that the ordinary meaning of a “policy of insurance” would be limited to a private contract between an insured person and their private insurance company.

“The court went on to state that an average person would not consider benefits provided under a mandatory statutory program such as CPP to be a private insurance contract,” Pearn says, noting the decision upholds a previous position by the New Brunswick Court of Appeal in Economical Mutual Insurance Co. v. Lapalme, 2010 NBCA 87 (CanLII).

It’s good news for drivers in Atlantic Canada who can feel confident that the extra money they’re spending on the SEF 44 policy is a good value, Pearn says.

“This brings Nova Scotia in line with how I understand this policy to be interpreted in New Brunswick. It increases the value of the policy because if you’re rendered disabled from a car accident, you’re entitled to CPP benefits and you’re also entitled to be compensated by your insurer.”

Pearn also suggests that because the wording of the SEF 44 is fairly uniform among the Atlantic provinces, it is likely the decision will be followed in similar cases in the region.

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