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Overlapping coverage: Insurers are more likely to equally share the burden

3 minute read

The Court of Appeal for Ontario recently clarified the approach to determining insurers’ obligations when an insured has overlapping coverage. Specifically, in TD General Insurance Company v Intact Insurance Company,1 he Court of Appeal held two insurers were on equal footing and had to share equally in the defence and indemnity of an insured because their “other insurance” clauses were identical and could not be reconciled.

Facts

A passenger of a boat commenced a personal injury action alleging she was injured when the boat (a 17 ½ foot Aluma with a 135 horsepower outboard motor) struck the shoreline. The passenger sued both the driver and owner of the boat.

The driver was covered by two policies of insurance. The owner of the boat held an insurance policy with TD General Insurance Company (“TD”) that covered the driver. The driver was also covered by a homeowner’s policy issued by Intact Insurance Company (“Intact”). The two policies had identical “other insurance” clauses that provided:
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 seeking an order that the insurance companies had to share equally in the defence and indemnity of the driver stemming from the passenger’s claim. The application judge dismissed the application.

Court of Appeal Decision

The Court of Appeal allowed the appeal and held that the Supreme Court of Canada’s decision in Family Insurance Corp v Lombard Canada Ltd2 established “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”. Justice Juriansz (writing for the Court of Appeal) held the analysis may therefore be boiled down to two questions:

  • the first question is whether there is overlapping coverage; and,
  • 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.3 Justice Juriansz stated that “[w]here 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”.4

The Court of Appeal held that TD and Intact had to share equally in the defence and indemnity of their co-insured. The Court found that: (1) there was overlapping coverage as the insured was covered by the two policies of insurance; and, (2) the two clauses in the policies limiting the insurers’ obligations were irreconcilable because both state (in identical language) they are excess to other insurance that covers the loss.

Conclusion

The Court of Appeal’s decision makes practical sense. Both policies provided coverage for this insured for the same loss. In the absence of clear language to the contrary, both policies were available to provide a defence and indemnity for the loss.


[1] TD General Insurance Company v Intact Insurance Company, 2019 ONCA 5 [TD General Insurance].

[2] Family Insurance Corp v Lombard Canada Ltd, 2002 SCC 48.

[3] TD General Insurance, supra note 1 at para 17.

[4] Ibid at para 17.

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