Myers-Gordon et al. v. Martin et al., 2017 ONSC 872

OPCF44R coverage deemed to act as excess coverage to home insurance policy following pedestrian MVA

Released February 3, 2017 | Full Decision [Document Bank]

This Rule 22 Special Case motion concerned a determination as to whether State Farm Insurance was obligated to respond to claims brought for underinsured motorist coverage.

In Ontario claims involving a motor vehicle collision, an injured victim typically seeks compensation from the at-fault motorist’s insurance company. When the at-fault motorist’s insurance limits are inadequate to pay all of the damages, the injured person may be able to obtain the shortfall from his or her own auto insurer for “uninsured motorist coverage” and/or “underinsured motorist coverage”. This coverage is also available to spouses and dependent children of people with auto insurance. Uninsured coverage is required when the “at-fault” vehicle is not insured (e.g. someone was driving without insurance or with a stolen car). Underinsured motorist coverage arises when the injured person’s damages are greater than the at-fault motorist’s insurance limits. However, an injured person cannot obtain underinsured motorist coverage if the at-fault motorist’s insurance limits are equal to or greater in value than the underinsured motorist coverage.

This motion arose as a result of a motor vehicle/pedestrian collision wherein four pedestrian teenagers were struck by a drunk driver after a keg party. Two of the four teens were tragically killed while the other two, including Ms. Kelly Myers-Gordon, suffered significant injuries. The Plaintiffs sued the at-fault motorist; however, it was later ruled that the drunk driver took the vehicle without consent, meaning that this vehicle was uninsured. Ms. Myers-Gordon was therefore unable to obtain any compensation though the insurer of the “at-fault” driver. She therefore sued State Farm Insurance for uninsured motorist coverage and underinsured motorist coverage. State Farm Insurance agreed that it was obligated to respond to claims for $200,000 in uninsured motorist coverage but argued that they were not responsible for claims under the underinsured motorist coverage as there was an even larger homeowner’s policy that was responding on behalf of the individuals who hosted the keg party.

The Court held in favour of the Plaintiffs. While Ms. Myers-Gordon and her family were obligated to first exhaust the homeowner’s policy before seeking compensation from State Farm for underinsured motorist coverage, State Farm Insurance could not escape their obligation to cover the Plaintiffs. Applying basic rules of statutory interpretation, the Court found that the standard contract for underinsured motorist coverage (otherwise known as OPCF44R family protection coverage) differentiated between coverage and priority.