Smith v. Taylor
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The Facts
On August 18, 2017, a motorcyclist, Ken Schlimme, died when a car driven by Robert Taylor ran a stop sign and struck him. His common-law spouse, Kerry Smith, sued for $3.5 million in damages, including financial dependency losses. Mr. Taylor's insurer, Wawanesa, provided $1 million of liability cover. Ms. Smith's auto policy with Aviva carried a $1 million OPCF 44R endorsement, but the endorsement only responds where the at-fault motorist's liability limit is lower than the endorsement limit, so it paid nothing and she accepted that. Mr. Schlimme's homeowner policy with Aviva had a Personal Excess Liability endorsement that included a further $1 million of excess family protection coverage, and each spouse was covered under the other's policy. Aviva refused to pay under it, and a motion judge dismissed her action against Aviva. The judge read the excess wording as importing the endorsement's definition of inadequately insured motorist, so that Mr. Taylor was not one, and also found that she had to use up the OPCF 44R limit before reaching the excess coverage.
What the Court Decided
Justice Gillese, for a panel with Justices Trotter and Coroza, allowed the appeal on a correctness standard. On the first point, the court held that the OPCF 44R definition could not be carried into the excess wording, because that definition is tied to the "limit of family protection coverage" set out in the certificate of automobile insurance, and the excess endorsement sits outside the auto regulatory regime. Applying the definition would turn the excess endorsement into a second OPCF 44R and defeat its purpose of adding another layer. Given its ordinary meaning, Mr. Taylor was an inadequately insured motorist, because his $1 million left a $2.5 million shortfall on the pleaded damages. On exhaustion, the court held that section 18 of the endorsement, which governs priority where more than one claim is available, deals only with competing OPCF 44R endorsements and similar automobile policies, not with a homeowner policy. The excess endorsement said nothing that required first collecting under the OPCF 44R, its second paragraph was ambiguous, and ambiguity and coverage-granting wording are read in favour of the insured. Ms. Smith could therefore claim under the excess endorsement without exhausting or triggering the OPCF 44R. The court noted that other insurers' excess policies have been worded to require deductions, so the result turns on this particular endorsement. It did not decide how much Ms. Smith would recover.
Some homeowner and umbrella policies include their own family protection or underinsured wording. This decision shows that such cover is read according to its own words, and it may add protection above the OPCF 44R even when the endorsement itself pays nothing. It is a reminder to ask for every policy in the household and to read the excess wording closely. It does not mean that every homeowner or umbrella policy has this feature, or that an insurer cannot write the policy to require deductions or exhaustion.
“…essentially converts the Excess Endorsement into a second OPCF 44R policy”— Smith v. Taylor, 2024 ONCA 223, para. 28
Does This Affect You?
- ✓You lost a family member or were injured by a driver whose liability limit equals your OPCF 44R limit, so your endorsement paid nothing.
- ✓Your home or umbrella policy has an endorsement mentioning family protection, underinsured or inadequately insured motorist cover.
- ✓An insurer says you must use up one layer of cover before the next layer can be considered.
Key Takeaways
- A home policy's excess family protection endorsement is interpreted by its own words and may stack on top of OPCF 44R.
- The priority and exhaustion rules in the OPCF 44R govern competing auto endorsements, not every other kind of policy.
- Unclear coverage wording is read in favour of the person insured, but another insurer's differently worded excess policy could reach a different result.