Accident Must be “Intentional” from Insured’s Perspective
Sekhon v. RBC General Insurance Co., [2008] O.J. No. 4999, concerns an appeal by an insurer from a decision requiring it to pay to the Respondent $37,000 for collision damage under her automobile insurance policy. The Respondent’s vehicle was damaged when the vehicle, driven by the Respondent’s daughter, struck a tree after having crossed three lanes of traffic and gone through a fence. It was an agreed fact that, immediately following the incident, the Respondent’s daughter said that she had caused the collision “on purpose” “to test her mortality” or “to test her immortality”. The issue at trial was whether the Respondent’s loss fell within the confines of “direct and accidental loss” under s. 7.1.1 of the standard Ontario Automobile Policy that governed the parties’ rights. The trial judge found on the totality of the evidence that, “on a balance of probabilities [the Respondent's daughter] was suffering from an acute psychiatric disorder, such that she had no conscious or deliberate physical control of the operation of the motor vehicle due to the absence of a sane and deliberating mind”. He concluded that the loss sustained by the Respondent as a result of the damage to her vehicle fell within the meaning of “direct and accidental loss” under s. 7.1.1.
This judgment was affirmed by the Ontario Divisional Court. The Court found that there was evidence upon which the trial judge could conclude on a balance of probabilities that the Respondent’s daughter had no conscious or deliberate physical control of the Respondent’s vehicle, despite her comments immediately following the event that she intended to test her mortality or immortality. Interestingly, the Court also dealt with the Respondent’s cross-appeal. If the Appellant’s appeal were successful, the Respondent, on the cross-appeal, submitted that the trial judge erred in law in finding that the Respondent, the innocent owner of the vehicle that was damaged, was disentitled to compensation for loss under her standard automobile insurance policy as a result of an intentional act (if so found) of her daughter to whom the Respondent had innocently and without any negligence lent her vehicle. The Divisional Court held that since the loss was not intentional from the perspective of the Respondent, she could recover notwithstanding an intentionally caused loss. It would be interesting to see if such an argument would apply in other coverage situations, for instance in home owners’ or CGL policies. Typically these policies contain an exclusion for intentional or criminal acts of an insured. Depending on the wording of the exclusion, insurers often make the argument that the intentional or criminal acts of one insured excludes coverage for an innocent insured. Applying the reasoning in Sekhon would shift the focus to the perspective of the innocent insured, and thus provide an addtional argument for insurance coverage.