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Canada: Bullies And Their Parents Not Covered For Lawsuits Under Home Insurance Policy

| Oct 27, 2015 | Bullying | 0 comments

Article by Camille Dunbar

Theall Group LLP

In Unifund Assurance Company v. D.E.,1 the Ontario Court of Appeal ruled that the parents of a school-age bully are not covered for their negligent supervision under their home insurance policy.
We recently reported on D.E. v. Unifund Assurance Company,2 a trial level decision where the Court declared that an insurer, Unifund, had to defend and indemnify parents of an alleged school-age bully. The decision was overturned and the Court of Appeal’s reasoning is precedent-setting and instructive to both insurers and policy holders.
A claim was brought against the minor daughter of D.E. and L.E. (the “parents”), and two other Grade 8 students, for allegedly bullying a fellow classmate, causing her physical and psychological injuries. The parents were also sued for their alleged failure to control their daughter and prevent the bullying.
The parents were insured under a comprehensive homeowners’ policy that provided for liability coverage if their personal actions unintentionally caused bodily injury or property damage. The parents successfully obtained a declaration that Unifund had a duty to defend and indemnify them in the underlying action. Unifund appealed.
On appeal, the primary issue was whether either of two exclusion clauses in the policy saved Unifund from having to defend and indemnify the parents.
Justice MacPherson, writing for the Court of Appeal, relied on the three part test set out in Non-Marine Underwriter, Lloyd’s of London v. Scalera,3 regarding an insurer’s to duty to defend and indemnify:
  1. whether the legal allegations against the insured are properly pleaded;
  2. whether any claims are entirely derivative in nature;
  3. whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer’s duty to defend.
Justice MacPherson found that the first two criteria were easily met, so he zeroed in on the third part of the test: whether the properly pleaded, non-derivative claims against the parents triggered Unifund’s duty to defend. He noted that the claims against the parents were described in terms such as “failure to take disciplinary action” and “failure to discharge their duty to prevent the continuous physical and psychological harassment.” When compared with the dictionary definition of negligence, which includes “failure to take proper care over something”, he found that the claims against the parents were squarely grounded in negligence.
Justice MacPherson then turned to one of the two exclusion clauses in the policy, which precluded coverage for:
failure of any person insured by this policy to take steps to prevent sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment.
He dismissed the lower court’s finding of ambiguity, which was based on the lack of “express language” addressing whether “negligent failure to prevent physical abuse or molestation” was excluded under the policy. In support of this finding, he referred to a similar decision, where it was held that the policy excluded coverage for precisely the type of claim made against a babysitter for negligent supervision.
Justice MacPherson concluded that the exclusion clause was clear on its face and it applied to the claims as pleaded against the parents. As a result, he declared that Unifund did not have a duty to defend or indemnify the parents in the underlying lawsuit.
This decision makes it clear: neither school-age bullies nor their parents will be covered under a homeowners’ insurance policy that contains this specific exclusion. As bullying, and now particularly cyber-bullying, remains a sensitive issue for many Canadian schools, we expect this decision will have a precedential effect on similar claims. While insurers are entitled to choose what they cover, these cases always raise the question of how a policy that does not cover negligence that causes bodily injury can be referred to as “comprehensive”. It is also notable that at least one other insurer’s standard policy exclusion simultaneously refers to “the failure to supervise and the negligent supervision of any person”.
1. 2015 ONCA 423.
2. 2014 ONSC 5243.
3. 2000 SCC 24.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

The Insurance Bureau of Canada (IBC) reported earlier this week that the insured damage caused by the heavy rains and strong winds that swept southern Ontario on June 22 is estimated at more than $30 million.

Lightning on June 22 in Mitchell, Ont. Photo: @kylebrobertson.

The figure is based on a preliminary estimate from Catastrophe Indices and Quantification Inc. (CatIQ), which compiles and combines comprehensive insured loss amounts and related information to serve the risk management needs of the insurance and reinsurance industries, IBC noted in a statement.

The heavy rain in Toronto and London, Ont. last month caused localized flooding. In Toronto, flooding was mainly limited to pooling water, causing the closure of intersections and cancellation of several early-morning GO trains, the IBC said. Basement flooding was also reported across the Greater Toronto Area.

In certain parts of London, the rain overwhelmed the sewer system. The resulting sewer backup caused residential basements to flood and affected commercial properties, including White Oaks Mall.

In other parts of southern Ontario, strong winds brought down trees, causing power outages. With the relentless lightning contributing to outages, at least 100,000 Hydro One customers lost power, IBC reported.

“Weather events that used to happen every 40 years can now happen every six years,” said Ralph Palumbo, vice president, Ontario, IBC, in the statement. “In recent years, we’ve seen first-hand the impact that storms can have. Storms are more frequently damaging our homes and business properties.”

Insurers continue to counsel consumers on the need to understand their risks and take action to reduce their property’s vulnerability to damage. Before another storm hits, consumers should contact their insurance representatives for information on their policies and what types of coverage best suits their individual circumstances, the IBC recommended.

When it comes to working with hire-a-drive services like Uber, you can't afford to ignore the insurance implications

Lorraine Sommerfeld


Originally published: 1 day ago
Uber drivers can use the HOV lanes,” read the headline. Upon closer observation, the sentence continued: providing they have three or more occupants, just like everyone else. So close, Uber, so close. The trendy hire-a-drive app that puts a car at your fingertips in many parts of the world just can’t seem to catch a break. Does it deserve to?

The Pan Am Games are set to descend upon the Toronto region in the coming days, promising to swirl the already catatonic gridlock further down into the depths of hell. I’m sure more than a few Uber drivers were parsing the fine print that allows taxis and airport limos to use the coveted HOV lanes, now temporarily drawn on an additional 185 kilometres of major highways around the Greater Toronto Area. That’s in addition to the existing 50 permanent kilometres. In the eyes of the law, Uber still hangs in a no man’s land.

This article started out six months ago as a stunt piece: I was going to simply become an Uber driver for a day and report back. A call to my insurance broker simply seeking background information ground that idea to a halt, and fast. Even hinting what I was considering would cost me my private car insurance policy, a risk I can’t afford to take. A quick pivot sent me to Twitter looking for an existing Uber driver who would let me ride along; after an initial encouraging phone call and a few email exchanges, he went to ground, never to be heard from. Guess having his name in the paper was too much of a risk.

News organizations aren’t fans of pseudonyms, but it didn’t matter. I couldn’t even get someone to play along with a black bar across their eyes and a voice scrambler. Uber advertises itself as an excellent way to make easy money if you own a car. You must be 21 with a full licence, own a four-door car less than 10 years old, pass a background check they pay for, and have valid car insurance.

Therein lies the rub for prospective Uber drivers here in Canada. “Will any of the described automobiles be rented or leased to others, or used to carry passengers for compensation or hire, or haul a trailer, or carry explosives or radioactive material?” Every insurance company in Canada uses forms that carry some version of this sentence, and if you check “no” and then sign off on the application and then start accepting fees for ferrying people (or pizzas) around, you could be committing fraud.

It’s not that you can’t be an Uber driver and also have insurance; it’s that you can’t lie about it. A recent Forbes survey published in the U.S. found “…while the vast majority of respondents – almost 70% – say they plan to purchase a policy in the future, a disturbing 84% say they do not tell their insurer or their agent/broker about their ridesharing activities.”

Uber outlines how their end of the deal functions: your responsibility is riding on your personal insurance, and if damages reach past your limits, their own insurance will kick in. Uber knows you’re driving for Uber; there’s a good chance your insurance company does not, unless you notified them. And notifying your insurance company of your Uber intentions can work out one of two ways:

• You call your company and ask innocently if considering being an Uber driver could affect personal insurance. They could cancel your insurance or at the very least start investigating it because now they know what you’re doing or;

• They can offer to sell you the proper product for what you’re considering, which is commercial coverage. This will be – and I’m ballparking here – maybe three times your current rate.

So, there’s a chance some individuals won’t call their insurance company, and if that Forbes survey is even close to accurate, the chance is most won’t. Who can remember ticking that box so many years ago? Besides, if I start delivering pizzas, I’m hardly going to have to call my insurance company, right? Actually, you are. Your insurer does need to know that you’re delivering pizzas. They want to know if anyone in your household with access to your car is delivering pizzas. Or flowers. Or Uber clients.

It’s not that they’re going to jack your rates similarly for pizzas and passengers. As Pete Karageorgos of the Insurance Bureau of Canada is quick to point out, “Insurers know pizzas aren’t passengers. Our job is to match policy to risk; it’s critical that you inform your provider of any material change to that risk, and be transparent about it.”

If you’re not, you’re swimming in a fraud pond. In the event of a crash, insurers can opt to deny the claim, leaving you at the mercy of someone like Uber’s Internet promises. They could also decide to cover the claim, but then back charge you the premium you should have been paying had you notified them in the first place. I like to complain about usurious insurance rates, especially here in Ontario, but I would be angrier if payouts to drivers using their vehicles commercially are pooled with my non-commercial activities.

A call to police services reveals that cops consider this a matter of licensing unless a driver is breaking the Highway Traffic Act. Constable Clint Stibbe raises an interesting thought, however, as we wind up the call.

“Right now, police cars, rentals cars and taxis that are decommissioned have to be registered with the Ministry so as to be readily and honestly identified to buyers. Where’s the protection for buyers buying a car that hasn’t been flagged but has been used commercially?”

Uber may indeed end up being too big to fail as riders vote with their wallets, and their phones. But until licensing commissions and politicians sort out the fine print, your biggest concern if you plan on driving for Uber in Canada isn’t whether you can use the HOV lanes – it’s whether your insurance will kick you to the curb.

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TORONTO - Ontario unanimously passed legislation Tuesday increasing penalties for drivers who text or use a handheld phone while on the road, and who open their door into the path of a cyclist.

The legislation imposes a one-metre distance rule between motor vehicles and bicycles “where practicable”

The update to the Highway Traffic Act also imposes a one-metre distance rule between motor vehicles and bicycles – “where practicable” - and will force drivers to wait until pedestrians completely cross the road at school crossings.

Using handheld electronic devices while driving has been outlawed in Ontario since 2009, except for 911 emergency calls.

Fines for distracted drivers will increase from the old range of $60 to $500 to between $300 to $1,000, plus three demerit points.

“If they do it, and they’re caught doing it, there will be consequences,” said Transportation Minister Steven Del Duca. “But if they’re going to do it, they have to understand how dangerous it is, how they’re putting themselves, the passengers in their car, pedestrians and cyclists, at really, really horrific risk.”

A 2014 survey by the Centre for Addiction and Mental Health found more than one-third of licensed Ontario students in Grades 10 to 12 admitted to having texted while driving at least once in the previous year.

Related: Ontario politicians send road safety bill to committee

“I think it’s really important for those who are just starting to drive to recognize this is horribly dangerous,” said Del Duca. “It’s not worth it.”

Fines for opening a door into the path of a cyclist will increase to the same amounts as for distracted driving, and motorists must leave a one-metre distance when passing bicycles. Cyclists will be allowed to use the paved shoulders on non-400 series provincial highways.

“We call it sharing the road for a reason,” said Del Duca. “Cyclists have a responsibility. So do motorists.”

Fines will increase from $20 to between $60 and $500 for bicyclists who do not use a light and reflectors or reflective material.

The bill also requires that drivers wait until pedestrians completely cross the road at school crossings and at crosswalks with pedestrian-operated crossing lights, and not yield just half the roadway as required under the old law. Municipalities will be allowed to install more pedestrian crossing devices on low-speed and low-volume roads.

Brian Patterson of the Ontario Safety League applauded the government’s efforts to make the roads safer for everyone.

Related: Ontario bill providing for license suspensions for drug-impaired drivers ready for third reading

“People will be better able to understand that we want safe, focused drivers that protect both cyclists and pedestrians, and that there are obligations on those parties as well,” he said.

Drivers impaired by drugs will face the same penalties as drivers impaired by alcohol, with escalating roadside suspensions of three to 90 days. Vehicles could be impounded for seven days and offenders could be required to install an ignition interlock device to prevent them from driving while impaired.

Government statistics show over 45 per cent of drivers killed in Ontario were found to have drugs or a combination of drugs and alcohol in their system.

The updated law also clarifies the mandatory and discretionary requirements by doctors to report unfit drivers, and allows for reporting by other, qualified medical professionals. People with a medical suspension will be allowed to retain their driver’s licence card for identification purposes and for when they are eligible to drive again.


After Ivy Scotland's insurance claim was denied, experts point out what's usually not covered


By Matt Kwong, CBC News Posted: Apr 21, 2015 5:00 AM ET Last Updated: Apr 22, 2015 6:06 AM ET

This shows a real estate listing photo of the Browns' home before a fire destroyed it in late winter 2013.

This shows a real estate listing photo of the Browns' home before a fire destroyed it in late winter 2013. (Stuart and Annie Brown)


What's common practice isn't always common knowledge in the home insurance business, as an elderly woman battling cancer learned recently. 

As revealed by a CBC Go Public investigation, Ivy Scotland, 84, was stunned when she was saddled with an $11,000 repair bill after she left her Pembroke, Ont., home for treatment near her hospital. In the intervening three weeks, the pipes in her home froze and burst, causing water damage.

But Grey Power denied Scotland's insurance claim, citing a clause in the policy that Canadians who leave their homes unattended for more than four days in the winter are not eligible for coverage for water damage unless they appoint a responsible person to check the heat inside every day.

Insurance experts agree the case is unfortunate, but the rules are as they are.

"That's an exclusion on every personalized property insurance policy I know," said Ken Orr, owner of Orr & Associates Insurance Brokers, and a former president of the Insurance Brokers Association of Canada. 

"We try hard as brokers to tell people in our newsletters and remind them there are limitations in all policies."

Standard exclusions aren't always immediately clear, however. Still, there are some general limitations and misconceptions home owners should make themselves aware of:

30-day vacancy rule


If you're a property owner whose rented house remains vacant for more than a month, your insurance company can deny coverage for any losses such as fire or water damage. The 30-day rule applies whether or not the customer is paying monthly insurance bills. 

Ivy Scotland 2

Scotland was undergoing cancer treatment at Ottawa General Hospital when her furnace went out in her home, causing the pipes to freeze and burst last winter. (CBC)

"It can only be vacant for 30 days without notifying your insurance company, then technically the coverage is void," Orr said.

"If somebody owns a rented dwelling, and the tenants move out and it might be a month or two before you move back into it, that's a concern."

Owners can still obtain what's called a vacancy permit from their insurer so the coverage never ceases after the occupants have moved out. However, this add-on, which must be purchased within the 30 days, is typically limited to exclude malicious acts and vandalism.

A primary difference between a "vacant" and an "unoccupied" property is whether furniture is inside, indicating the owner intends to return. Snowbirds, for instance, could still leave for months at a time, and their homes would be considered unoccupied.

Jewelry covered only up to a limit


Home insurance only covers for the theft or loss of precious jewelry up to a "sub-limit" that could end up vastly undervaluing such items.

Some firms might offer coverage for up to $5,000 or $6,000, Orr said.

Brian Maltman, ‎executive director for the General Insurance OmbudService, which handles insurance disputes for Canadians, recommends consumers get their fine jewelry appraised and purchase an extension to their policies. 

To do this, they would probably have to provide supporting documentation such as photographs to prove the worth of their high-valued possessions.

Limitations for rare items


Christmas fire leads to year-long insurance coverage battle

The Browns' St. John's home after it was gutted by fire last Christmas. (Stuart and Annie Hall)

Stuart and Annie Brown

Annie and Stuart Brown lost their St. John's home to fire in December 2013. (CBC)

Stuart and Annie Brown lost their St. John's home in a house fire on Dec. 23, 2013. While the couple assumed they would be covered for the value of all the contents in their home, including certain antiquities collected from around the world and valued at $396,000, the Browns were out of luck.

Johnson Insurance only offered a quarter of that amount.

Orr said the limitations apply for items such as stamp collections (usually $1,000) and coin collections (usually $500), unless extensions are purchased.

Sewer backups, earthquakes not covered by basic policies


People are often surprised to learn that a sewer backup isn't included in their basic policy, but only through a specific policy extension.

Up until a few years ago, sewer backups were a part of many basic policies.

"Overland flooding is the kind of natural catastrophe that's sometimes considered beyond the capability of a company to respond to," Maltman said. "Earthquake insurance is similar. One earthquake could wipe out the industry."

Despite the fact sewer backup was not covered for many customers, RBC Insurance decided in 2013 to pay Albertans for damages related to the catastrophic summer flooding.

Maintenance exclusions


Poor upkeep of property can be grounds for denying a claim.


Brian Maltman, executive director for the General Insurance Ombudservice, advises anybody travelling for more than a couple of days to have a friend or relative check in on their home every day to make sure the heat still works. (Courtesy Brian Maltman)

That's because a home insurance policy is not a "a maintenance policy," says Pete Karageorgos, director of consumer and industry relations with the Insurance Bureau of Canada. 

Though some natural hazards can't have been avoided, other problems could have been taken care of in the first place. 

"If there's cracks in your foundation, well, your home is not built so that water seeps into your foundation," Karageorgo says. "That's a maintenance issue, not an insurance issue."

The same goes for damage inflicted by household pests. If critters have gnarled away at the attic to the point where a new roof is needed, standard insurance won't help much. 

"Toronto is undergoing the war with the raccoon now, but damage done by that raccoon, or a squirrel, or any sort of vermin to a person's home has an exclusion there," Karageorgos said.

Upgrades could affect policy


A few renovation or remodelling projects at home can also have big consequences on your insurance policy, Karageorgos says.

Christmas fire leads to year-long insurance coverage battle

The front of the Browns' St. John's home after it was gutted by fire last Christmas. (Stuart and Annie Hall)

"If you're adding living space by finishing your basement, you're adding value and costs," he says. "You need to let the insurance company know you've updated the countertops, put in natural stone or upgraded the cabinetry."

Extensive alternations can also change the policy classification, bump up the replacement cost of your home, or lower premiums.

"If you have a bigger home than what you've told the insurance company you had, when you have a claim and the insurance company discovers that material change in risk, that's a no-no," Karageorgos said. "The company may decide not to pay the claim, or they may cancel your policy, or pay the claim and deduct what the additional cost of insurance would have been had you been honest with them from the word go."

Insurance brokers strongly recommend home owners carefully dig into their property insurance policies to find out what they're covered for. Anyone with questions can also consult the Insurance Bureau of Canada, or take up grievances with the General Insurance Ombudservice.

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