Third-party drivers injured in an accident caused by the criminal action of a suicidal driver cannot claim more than the minimum liability limit of $200,000 under the suicidal driver’s policy due to a listed public order rule in the New Brunswick Insurance Actthe provincial court of appeal ruled.
The public policy rule aims to prevent an insured from being able to collect insurance for an illegal act. Although the public policy rule does not prevent injured third parties from suing the insured for damages, the Court of Appeal concluded that it can be used to limit the liability of the insured to the legal minimum indicated in automobile policy, which in New Brunswick is $200,000.
In Cooperators General Insurance Company et al. versus Martin et al., released today, Pierrette Landry attempted to take her own life by deliberately crossing the center line of a freeway and colliding with two oncoming vehicles on December 1, 2014. The oncoming vehicles were manned by Bernadette Martin and Donald Rose, who were injured in the crash.
Cooperators General Insurance Company was insuring Martin at the time of the accident, while Unifund Assurance Company was insuring Rose. A third claimant, Jacqueline Blanchard, is insured by Economical Insurance, but she did not take part in the case.
Landry’s suicide attempt failed and she was convicted of impaired driving causing bodily harm. She died in 2019. The lower court judge ruled that there was no doubt that the collision resulted from Landry’s actions and that the damage resulting from his deliberate act “cannot be characterized as unexpected or unusual”. . No one has disputed this account.
Martin, Rose and Blanchard have actions pending against the Landry estate seeking damages for their losses and injuries. The total amount of their claims is not yet known, but is expected to exceed $200,000. All three plaintiffs are covered by standard auto insurance policies, which include a $1 million liability limit, and 44 NBTF Family Protection Endorsements each with $1 million limits.
Pembridge, Landry’s automobile insurer, refused to cover Landry’s Estate, arguing that at the time of the collision Landry was committing a criminal offense with intent to cause loss or damage. Under a law of public order of article 2 of the Insurance Actinsurers are not required to insure against criminal acts, under the principle that policyholders should not be allowed to profit from their illegal acts.
Pembridge argued that the same public order law meant that it was not obligated to pay more than the $200,000 minimum for the total of the three third-party claims made against Landry’s estate.
The Cooperators and Unifund appealed all the way to the New Brunswick Court of Appeal. They argued that the public order rule in Article 2 of the Insurance Act did not limit Pembridge’s liability to $200,000. They also argued that the rule did not apply to their third-party claims.
The New Brunswick Court of Appeal upheld the lower court rulings in favor of Pembridge.
The rule of public order provided for in art. 2 of Insurance Act reads as follows: “Unless the contract otherwise provides, a violation of any criminal or other law in force in the province or elsewhere does not operate, ipso factorender unenforceable a claim for compensation under an insurance contract unless the offense is committed by the insuredor by another person with the consent of the insured, with intent to cause loss or damage.
As everyone agreed, Landry’s actions were intended to cause harm.
That said, The Cooperators and Unifund argued that section 250(4) of the Insurance Act does not prevent third parties from suing for damages or injuries caused by an insured driver, even if the driver caused the injuries on the basis of a criminal act.
Admittedly, the Court of Appeal accepted, adding that the analysis does not stop there.
Section 250(11) of the Insurance Act States: “When one or more contracts provide coverage beyond the limits mentioned in Article 243 [of the auto policy, i.e. $200,000]the insurer can… take advantage of all defense that it is entitled to set up against the insured, notwithstanding paragraph 4).
The rule of public order, art. 2 of Insurance Actis one of those defences, the Court of Appeal held.
“Against the plaintiff [Landry’s estate], these defenses are not limited to those set out in s. 250(4) but encompass any defence,” the court’s decision reads. “This includes the defense established by s. 2, which again is not disputed by [Cooperators and Unifund] as being at the disposal of Pembridge against its insured, Mrs. Landry.
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