Ontario’s Court of Appeal recently clarified in Hunt v Peel Mutual Insurance Company the circumstances in which an insurer has a duty to defend an occupant of a vehicle insured under its policy. 

The Facts

The appellant was sued by his daughter, a minor, for negligent parenting. This stemmed from an incident in which the father and his daughter were passengers in the vehicle of his girlfriend, who was driving impaired at the time. The girlfriend held an automobile insurance policy with the respondent, Peel Mutual Insurance Company. The insurer declined to defend the father in the negligent parenting proceedings. 

Decision of the Motions Judge

The father moved for a declaration that Peel Mutual had a duty to defend him against his daughter’s lawsuit. He asserted that he was an “insured person” within the meaning of s.239(1) of the Insurance Act which triggers the duty to defend. That section reads: 

239(1) […] every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract […] against liability imposed by law upon the insured named in the contract or that other person for loss or damage, 

(a) arising from the ownership or directly or indirectly from the use or operation of any such automobile;

The motions judge denied the father’s motion and he subsequently appealed.

 

An Occupant’s Liability Must Arise Through the Use or Operation of the Vehicle for Coverage to Apply

The Court of Appeal upheld the decision. The Court found that coverage was precluded because an occupant’s liability must be for loss or damage arising from the use or operation of the automobile. The daughter’s injuries were connected to the use of the vehicle, but the father’s liability arose only through his negligent parenting, which was not related to anything he did or did not do as an occupant of his girlfriend’s vehicle. The father’s potential liability was based on the allegation that he should not have permitted his daughter to be in a car with an impaired driver. The absence of the causal connection to the use and operation of the vehicle required by the statute was fatal to his motion. The appeal was ultimately dismissed. 

Take Aways for Insurers

An auto insurers duty to defend is not automatically triggered simply because defendant was an occupant of the car and damage or loss resulted from a car accident. The insurer’s duty to defend only applies if liability is related to the use or operation of a vehicle. 

Shawn O’Connor and Sarah Mack, articling student