TD General Insurance Company v. Intact Insurance Company, 2019 ONCA 5

Full Decision

Counsel:

• Marc D. Isaacs, Arie Odinocki, for Appellant
• Gary J. Marcuccio, for Respondent

Judge: C.W. Hourigan J.A., B.W. Miller J.A., and G.T. Trotter J.A.

A boat struck a shoreline. The passenger sued both of the boat’s driver and owner. The driver was covered by two different insurance policies. The first policy was held by the boat’s owner (the TD Policy). The second policy was the driver’s own homeowner’s policy (the Intact Policy). Both policies included identical “other insurance clauses”. The clauses read:

If you have other insurance which applies to a loss or claim, or would have applied if this policy did not exist, this policy will be considered excess insurance and we will not pay any loss or claim until the amount of such other insurance is used up.

TD brought an application. It sought an order that both policies were on equal footing, and needed to share equally in the driver’s defence and indemnity. The application was dismissed. According to the application judge, the TD Policy was “intended to provide the primary insurance coverage for the watercraft”.

The Court of Appeal held that the application judge erred by applying the “closeness to the risk” approach (a.k.a. the “Minnesota approach”). The Minnesota approach urges the Court to address the following factors in assessing which policy should respond where there are competing and irreconcilable policy provisions:

  1. Which policy specifically described the accident-causing instrumentality?
  2. Which premium is reflective of the greater contemplated exposure?
  3. Does one policy contemplate the risk and use of the accident-causing instrumentality with greater specificity than the other policy – that is, is coverage of the risk primary in one policy and incidental to the other?

The Minnesota approach was rejected by the Supreme Court in Family Insurance Corp v Lombard Canada Ltd. According to the Supreme Court:

Where there is overlapping coverage “the focus of the examination is to determine whether the insurers intended to limit their obligation to contribute, by what method, and in what circumstances vis-à-vis the insured”…Where there are no limiting intentions or where those intentions cannot be reconciled, the insurers must share the burden equally under a coordinate obligation to make good the loss.

In the present case, there was no question of overlapping coverage – the policies clearly overlapped. Moreover, both policies had identical “other insurance clauses”, and neither policy referred to the other. Therefore, the policies were reconcilable. Both TD and Intact had to share equally in defence and indemnification. The Court wrote:

The second question is whether the insurers intended to limit their obligation to contribute, by what method, and in what circumstances vis-à-vis the insured. The focus in answering the second question is on the excess insurance clauses. The application judge found it significant that Intact would be an excess insurer should the claim exceed the limits of the TD Policy. However, as noted in para. 3 above, both policies had identical “other insurance clauses”. So in the same way, should the claim exceed the limits of the Intact policy, TD would be an excess insurer should. The limiting obligations in the two policies were irreconcilable.

The proper application of Family Insurance leads to the result that the two insurers must share the burden equally under a coordinate obligation to make good the loss.

…In the present case, both policies, by their terms, afforded primary coverage to the driver for the claim, and both policies provide that they are excess to other insurance that covers the loss. The conflict is irreconcilable.If you have other insurance which applies to a loss or claim, or would have applied if this policy did not exist, this policy will be considered excess insurance and we will not pay any loss or claim until the amount of such other insurance is used up.

Jordan Kofman
Written by

Jordan's practice focuses on motor vehicle accidents, occupiers’ liability, product liability, municipal liability, medical malpractice, wrongful death, accident benefits, and long-term disability claims.

In his spare time, he enjoys golfing, downhill skiing, road cycling, and fishing. Jordan is also an avid NFL and Toronto Blue Jays fan.