Auto insurers to pay $1 million for indirect auto claims

Two recent court rulings have ordered two insurance company’s Citadel General Assurance Co. and Lumbermens Mutual Casualty Co. to pay almost $1 million in damages for two unrelated lawsuits representing appeals for two incidents that both occurred in 1999.
Citadel is the auto insurer for Toronto teenager Michael Vytlingam’s family. In 1999, a boulder, that two men had dropped off a highway overpass, struck Vytlingam’s car. Injuries incurred from this accident left the 18-year-old disabled for life. Fulfilling the Vytlingam’s policy, which covered injuries sustained as a result of travelling in a car, Citadel paid the family approximately $1.5-million for care and other expenses. However, because their policy also contained a “family protection coverage endorsement,” the Vytlingam’s were able to claim an additional $1 million against any shortfall not covered by “an inadequately insured motorist” who causes the injuries.
Todd Farmer, one of the assailants, left his car running as he dropped the fated boulder off the overpass, therefore Farmer’s insurers had to pay third-party liability coverage, but Farmer only carried a minimum US$25,000. Therefore, the Vytlingam’s were able to make the additional “inadequately insured motorist” claim against Citadel.
Citadel did not fulfill the “family protection coverage” payout, stating Farmer did not drop the boulder as a result of the use or operation of his vehicle, as grounds. The Vytlingam’s responded by successfully suing their insurer for almost $1 million in damages.
Also in 1999, Ontario hunter Fred Wolfe’s pickup truck’s headlights illuminated a figure and, believing it to be and animal, he stepped out of his vehicle and shot. The figure turned out to be fellow hunter Harold Herbison, whose family has successfully sued Wolfe’s auto insurer, Lumbermens (which now operates as Kemper Canada), for $832,000 in damages.
“The rulings go farther than most people in the industry, or outside the industry, would expect their auto policy to extend,” Randy Bundus, vice president and general counsel for the Insurance Bureau of Canada, says of the rulings the Appeal Court of Ontario made in support of lower court decisions that effectively defined the incidents as motor vehicle accidents. Bundus says these cases may approach the Supreme Court of Canada, because both appeal cases involved two-to-one split decisions. Bundus adds that insurers may increasingly face other claims that can blur the lines of interpretation.
Defending litigation refers to these recent rulings as indiscriminate lawsuits implicating auto insurers in all manners of assaults and accidents even if they do not directly involve automobiles.