C.A Says Underinsured Auto Endorsement Does Not Cover Accident in Jamaica

In Pilot Insurance Company v. Sutherland, the Court of Appeal (Justices Rosenberg, Gillese and Lang) allowed an appeal from a decision of Madam Justice Margaret Eberhard of the Superior Court. Her Honour had held that a territorial limitation contained in a standard Ontario Automobile Policy was not specifically stated to apply to underinsured coverage. She went on to conclude that since any ambiguity in the policy language had to be construed against the insurer, the underinsured coverage must respond to a claim in which Plot’s insured (Sutherland) had been left a quadriplegic as a result of an accident in Jamaica.

In essence, the insured had argued that because the Ontario Policy Change Form 44R Endorsement (optional underinsured coverage) does not include an explicit territorial limitation (as does the compulsory uninsured auto coverage), no such restriction in coverage can be inferred. Eberhard J. accepted this argument, but the Court of Appeal did not.

Writing for the Court, Justice Susan Lang said that while it would have been possible for the underinsured endorsement to make its own specific provision for its territorial application, it did not do so. Instead, the endorsement said, in s. 22, that “Except as otherwise provided in this change form, all limits, terms, conditions, provisions, definitions and exclusions of the Policy shall have full force and effect.” The standard auto policy did contain a territorial limitation, restricting its effect to Canada, the United States and certain other jurisdictions, not including Jamaica. The Court of Appeal was satisfied that this provision had been incorporated into the underinsured coverage.

(The Court noted that “since the release of the motion judge’s decision in this case, another Superior Court judge has determined that the Policy’s territorial limitation applies to underinsured coverage” and cited a decision of Mr. Justice Larry Morin in Radu v. Hartford Fire Insurance. However, that case was in fact decided in 1997, some nine years before the ruling of Justice Eberhard in the present case. Justice Morin died several years ago.)

The Court of Appeal also found no ambiguity between the underinsured endorsement and the Insurance Act. Section 243 of the Act sets out a territorial limitation on coverage for the standard auto policy. Rather, Justice Lang said that “[s]ince the Act neither precludes additional underinsured coverage nor prohibits a territorial limitation, at most it can be said that the Act is silent on the issue. In this case, silence does not amount to a conflict. There is no reason to infer that a territorial limitation is prohibited for underinsured coverage from the fact that one is mandatory for uninsured and unidentified coverage.”

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