Auto insurance policies should not cover punitive damages

An insured should not be able to seek coverage for punitive damages under their automobile policy, as the damage is intended to punish a wrongdoer, not compensate an injured person, Stephen G. Ross, of Rogers Partners LLP, told delegates at the Ontario Insurance Adjusters Association (OIAA)’s 2008 conference in Toronto.
He stressed that to cover an insured when they have been found guilty of a wrong-doing that warrants a punitive damage is to shift the punishment from the insured to the insurer. In essence, this goes against public policy, he said.
This became a “live” issue, Ross said, when the Ontario Court of Appeal in 2006 made its decision in McIntyre v. Grigg.
In this case, Andrew Grigg, a Hamilton Tiger-Cat football player, got drunk, drove, went off of the road and struck two people on the sidewalk. He was not convicted of any criminal charge.
“The issue was whether or not the civil system could impose a penalty against this wrongdoer to show its outrage,” Ross said.
The court found Grigg made a deliberate choice to drink and drive. His conduct amounted to disrespect for the lives of others, enough to warrant censure and punishment, the court concluded.
The Court of Appeal decided Grigg should pay punitive damages.
But the court’s dissenting opinion expressed concern.
“This is an auto case and he may have coverage for that,” Ross said, characterizing the dissenting judgement. “If he has coverage for that, then all of the objects of punitive damages are thwarted: you are trying to punish someone, but the punishment is being offloaded to the insurer.”
In essence, “the minority said I would not award punitive damages in a case like this,” Ross continued.
“So looking at this in the aftermath, as to whether or not there should be coverage for punitive damages in an automobile policy, you have to look at some of the objectives of punitive damages. And, in my view, the primary objective is to punish the wrongdoer.”
Ross said coverage for such punitive damages should not be afforded under an automobile policy. “It would just undue the intent of the damages,” he said.