Third-party drivers injured in an accident caused by the criminal action of a suicidal driver cannot claim more than the minimum $200,000 liability limit in the suicidal driver’s policy because of a public policy rule enshrined in the New Brunswick Insurance Act, the province’s appeal court has ruled.
The public policy rule is intended to prevent an insured from being able to collect insurance for an unlawful act. While the public policy rule does not stop injured third parties from suing the insured for damages, the appeal court found it can be used to limit the insured’s liability to the legal minimum outlined in the auto policy, which in New Brunswick is $200,000.
In Cooperators General Insurance Company et al. v. Martin et al., released today, Pierrette Landry set out to commit suicide by deliberately crossing the centre line of a highway and colliding with two oncoming vehicles on Dec. 1, 2014. The oncoming vehicles were occupied by Bernadette Martin and Donald Rose, who were injured in the crash.
Cooperators General Insurance Company insured Martin at the time of the accident, while Unifund Assurance Company insured Rose. A third claimant, Jacqueline Blanchard, is insured by Economical Insurance, but they did not take part in the case.
Landry’s suicide attempt failed and she was convicted of impaired driving causing bodily harm. She passed away in 2019. The lower court judge ruled there was no doubt the collision resulted from Landry’s actions, and the damage flowing from her deliberate act “cannot be said to be unexpected or unusual.” No one disputed this account.
Martin, Rose and Blanchard have pending actions against the Landry Estate seeking to recover damages for their losses and injuries. The total amount of their claims is not yet known, but expected to exceed $200,000. All three claimants are covered by standard auto policies, which include a third-party liability limit of $1 million, and NBEF 44 Family Protection Endorsements each featuring $1-million limits.
Pembridge, the auto insurer for Landry, denied coverage to Landry’s Estate, arguing that at the time of the collision, Landry was committing a criminal offence with the intent to bring about loss or damage. Under a public policy law in Section 2 of the Insurance Act, insurers are not required to insure criminal acts, on the principle that insureds should not be allowed to profit from their illegal deeds.
Pembridge argued the same public policy law meant it was not obligated to pay out more than the $200,000 policy minimum for the total of the three third-party claims made against the Landry estate.
Cooperators and Unifund appealed all the way to the New Brunswick Appeal Court. They argued the public policy rule in Section 2 of the Insurance Act did not limit Pembridge’s liability to $200,000. They also argued the rule did not apply to their third-party claims.
New Brunswick’s Appeal Court upheld the lower court decisions in favour of Pembridge.
The public policy rule under s. 2 of the Insurance Act reads: “Unless the contract otherwise provides, a violation of any criminal or other law in force in the province or elsewhere does not, ipso facto, render unenforceable a claim for indemnity under a contract of insurance except where the violation is committed by the insured, or by another person with the consent of the insured, with intent to bring about loss or damage.”
As everyone agreed, Landry’s actions were intended to cause damage.
That said, Cooperators and Unifund argued Section 250(4) of the Insurance Act does not preclude third parties from suing for damage or injuries caused by an insured driver, even if the driver caused the injuries based on a criminal act.
True, the Appeal Court agreed, adding the analysis doesn’t stop there.
Section 250(11) of the Insurance Act states: “Where one or more contracts provide for coverage in excess of the limits mentioned in Section 243 [of the auto policy, i.e. $200,000], the insurer may…avail itself of any defence that it is entitled to set up against the insured, notwithstanding subsection (4).”
The public policy rule, s. 2 of the Insurance Act, is one such defence, the Court of Appeal ruled.
“As against the claimant [Landry’s estate], those defences are not limited to the ones set out in s. 250(4) but encompass any defence,” the court ruling states. “This includes the defence established by s. 2, which, once again, is not disputed by [Cooperators and Unifund] as being available to Pembridge against its insured, Ms. Landry.”