Hugo v. McNorgan

The Facts

On November 30, 2021, a driver ran a red light in London, Ontario, mounted a curb and struck members of a Brownies group, killing one child and injuring others. The litigation grew into eight companion actions with 25 plaintiffs, including family members suing under the Family Law Act. The driver and the vehicle's owner were insured by Desjardins under a standard auto policy with a $300,000 limit, and they also held a personal umbrella liability policy of $2 million on the standard excess form. The plaintiffs' own auto insurers had issued OPCF 44R endorsements. The parties asked the court to decide, before trial, whether the umbrella policy was a motor vehicle liability policy and whether the defendants were therefore inadequately insured motorists under the endorsement. The answers decided how the available money would be shared and which insurers would be called on.

What the Court Decided

In reasons of August 26, 2025, Justice ten Cate held that the umbrella policy is not a motor vehicle liability policy under section 1 of the Insurance Act or section 4 of the endorsement. The defendants' motor vehicle liability limit was therefore $300,000, and they counted as inadequately insured motorists. Shortly afterwards, the Court of Appeal decided in Rodriguez-Vergara v. Lamoureux, 2025 ONCA 620, that the insurers referred to in section 7 are the motor vehicle insurers and that the endorsement ranks ahead of a personal umbrella policy. In supplementary reasons dated February 3, 2026, the court withdrew its earlier priority paragraphs and ordered the following order of payment: first the defendants' auto policy, shared pro rata among the plaintiffs; then the OPCF 44R endorsements, until they are used up or the damages are met; and then the umbrella policy for whatever remains. The court also held that the endorsement insurers have no right of subrogation against the umbrella insurer, and that they may pursue the defendants personally only to the extent their payments exceed the combined auto and excess limits. In justifying the Rodriguez-Vergara approach, the judge pointed to consumer protection for both injured people and the policyholders who bought extra cover, to consistency with earlier appellate decisions, and to the likelihood that larger per-person limits will encourage settlement. The ruling does not value any plaintiff's damages.

Large crashes with several injured people often involve a defendant who bought an umbrella policy. This decision shows the order in which the money is expected to flow once the appeal court's ruling is applied: the auto limit, then the injured people's own endorsements, then the umbrella. It also limits how far the endorsement insurers can chase the defendants and the umbrella insurer afterwards. It is a first-instance application of an appeal ruling, with a changed order partway through, so the sequence of reasons matters.

Key Takeaways

1. A personal umbrella policy is not treated as motor vehicle insurance for the endorsement, so the at-fault driver is underinsured when the auto limit is below the endorsement's limit.
2. In this sequence, the auto policy pays first, the OPCF 44R endorsements second and the umbrella policy last.
3. Where many plaintiffs share a single auto limit, each receives a proportionate share of it, and the endorsements and umbrella respond for the rest.

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