On September 16, 2009, a minor child named Xavier Desormeaux, suffered injuries to his right eye after another minor child, Gabby Asselin, allegedly threw an object at him. At the time, Xavier and Gabby were on the property of, and in the care of, Xavier’s grandmother, Margaret Desormeaux.
Xavier and his parents and siblings sued Margaret Desormeaux, Gabby, and Gabby’s mother Anita Asselin for damages arising from Xavier’s injuries. The Defendants in turn sued Xavier’s mother, Sophie Desormeaux, for contribution and indemnity claiming that Sophie was negligent in failing to supervise Xavier and that Xavier was in her care at the time of the incident.
Sophie requested that her home insurer, Dominion of Canada, defend her in the claim under the third party liability coverage in her homeowner’s insurance policy. Dominion refused to defend Sophie, relying on an exclusion clause in the policy that removed coverage for claims brought against Sophie by her children.
Sophie brought an application before the Ontario Superior Court of Justice to obtain an Order forcing Dominion to defend her. On May 22, 2012, Justice Peter Annis, found that the exclusion clause applied and that Dominion was not required to defend Sophie. Justice Annis believed that the exclusion clause was clear and unambiguous and should be applied.
The exclusion clause relied upon by Dominion in this case appears to stem from the public policy principle that one should not profit or benefit from your wrongful or negligent conduct. The idea being that if your child sues you for negligent conduct and receives insurance proceeds you will benefit by those proceeds falling into the possession of your child.
This public policy rationale loses merit given its non-application in the motor vehicle context. Family members frequently sue each other when injuries have been sustained in a motor vehicle accident caused by a family member’s negligence. There is no common law, insurance exclusion or legislative bar to relatives suing each other for negligence for injuries caused by a motor vehicle accident, and there are no exclusions in motor vehicle insurance policies excluding third party liability coverage for claims brought by spouses or children against the negligent family member. Surely the negligent family member benefits when his/her spouse or child receives compensation from the insurer of the motor vehicle in this context.
Why then are insurers allowed to deny third party liability coverage in a non-motor vehicle context? The purpose of third party liability insurance coverage is to protect oneself from the costs of defending and paying claims. If our society and judicial system allows family members to sue each other for damages caused by negligence, why should insurers be allowed to exclude coverage for those situations? In my opinion, if third party liability coverage is sought and paid for, the coverage should be provided by the insurer regardless of the source of the claim. Otherwise, the insurer is essentially pocketing premiums for non-existent coverage. Sophie paid premiums to Dominion for the peace of mind that arises from the belief that if she was sued for her negligence by a third party, Dominion would pay the legal fees to defend her and the damages she is required to pay. If our legal system allows that third party to be a family member, third party liability coverage in homeowners’ insurance policies should apply to those situations.
Unfortunately Sophie was denied the peace of mind she thought she had purchased from Dominion.
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