Canadian Underwriter

Judge: Insurers on hook for punitive damages in drunk driving cases

November 8, 2006   by Canadian Underwriter

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For the first known time, the Ontario Court of Appeal has awarded punitive damages in a drunk driving case that resulted in serious injury. The decision, the court’s dissenting opinion suggests, means insurers will be on the hook for paying out rare punitive damage awards in similar drunk driving cases.
In Andrea McIntryre et al. v. Thomas Grigg et al., the Court of Appeal for Ontario awarded $20,000 in punitive damages against Grigg, a Hamilton Tiger-Cat football player at the time, who left a McMaster University pub in 1996 having consumed two or three times the legal limit of alcohol.
Grigg drove away from the pub, but doubled back when his passenger discovered she had left her purse behind. On his way back, he failed to stop at a sign, veered wide right, sheared off a lamp post and struck Andrea McIntyre, causing serious injury.
Grigg eventually pleaded guilty to a reckless driving charge and received a fine of $500. (Charges of impaired driving were dropped because Grigg was not informed of his rights at the time of the breathalyzer test.)
The lower court awarded punitive damages of $200,000. Punitive damages are only awarded when the court believes actions are extreme and merit further penalty i.e. they are “malicious, high-handed or oppressive.”
Used commonly as a deterrent against extreme, socially irresponsible behavior, punitive damages have never been awarded in a drunk driving case before, according to the lawyers involved in the case.
The Court of Appeal believed they were applicable in the Griggs case, although the appellate court lowered the amount from $200,000 to $20,000.
In a dissenting opinion, Court of Appeal Justice Robert Blair said the insurers and by extension policyholders would be the real victims of punitive damages awards in drunk driving cases.
“Mr. Grigg is required by law in Ontario to be insured,” Blair noted. “Although the details of his insurance are not before the court, the Standard Automobile Owner’s Policy provides that where the insured is legally responsible for the bodily injury to, or death, of others, or for damage to the property of others, as a result of owning, using or operating the insured automobile, the insurer ‘will make any payment [on the insured’s behalf] that the law requires, up to the limits of the policy.’
“Nothing in the Standard Policy terms exclude punitive damages from this provision, and nothing negatives coverage vis–vis third parties as a result of intoxication. Thus, it is unlikely that Mr. Grigg or other impaired drivers in similar situations will have to pay the punitive damages awarded (subject to policy limits).”
Blair added that nothing would be accomplished by way of deterrence because policyholders would ultimately pay for the punitive damage awards in the form of higher premiums.
“If insurers are to become exposed to an increasing risk of indemnifying for punitive damage awards, they will naturally be required to increase their reserves for losses accordingly,” Blair wrote. “Even if coverage for punitive damages becomes optional, insurance premiums across the board will inevitably rise.
“In that sense, then, all automobile-owning members of society will effectively be ‘punished’ for the conduct of Mr. Grigg and comparable drivers.”

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1 Comment » for Judge: Insurers on hook for punitive damages in drunk driving cases
  1. KJ North says:

    The automobile policy is a statutory form. Why don’t the provincial governments amend the form to exclude punitive damages? That becomes automatic across the entire industry, and everyone except Mr. Griggs or any other policyholder who acts so irresponsibly and without regard to human life, health or safety is happy.
    If the purpose of punitive is to punish the offender, covering punitive damages defeats the purpose. The article states there has never been a punitive award in an automobile lawsuit and so the situation was not considered when drafting the automobile policy.
    The automobile policy is not designed to respond, either providing coverage or excluding it. This is a new situation.
    If the courts want the freedom to punish the offender with a punitive claim, it should NOT BE PERMITTED by law to have coverage for it. Many US jurisdictions do this.
    One quick way is to add a punitive damages exclusion to the automobile policy forms. A better way is to make all punitive damages awards uninsurable in the country, that’s for all awards, not just auto. Passing the costs of the punishment onto all policyholders for all kinds of claims is just wrong.

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