New Brunswick Appeal Court addresses confusion around “ownership” in a motor vehicle policy exclusion related to underinsurance coverage

Confusion around the “co-ownership” of a Peterbilt truck used in a commercial trucking business and a personal Chevy pickup truck figured prominently a recent New Brunswick Court of Appeal case focused on a policy exclusion for underinsured motorist protection.
The Court of Appeal recently issued a decision in Estate of Michael Burke and 1021256 Ontario Inc. v. Royal & Sun Alliance Insurance Company of Canada.
The insured, Michael Burke, was severely injured when, through no fault of his own, the Peterbilt truck he was operating collided head-on with an uninsured automobile. The driver of the automobile died in the accident.
The policy of insurance covering the Peterbilt truck provided uninsured motorist coverage, but did not provide underinsured motorist protection.
Burke was covered for underinsured motorist protection under an NBEF No. 44-Family Protection Endorsement issued for Burke’s personal vehicle, a Chevrolet pickup truck, by Royal & SunAlliance.
The endorsement contains an exclusion intended to compel an insured to buy underinsurance coverage for each of several vehicles that she or he might “own.”
Following the collision, Burke received accident benefits and uninsured coverage through CGU Insurance Company of Canada, which issued a fleet policy for uninsured damage on the Peterbilt truck. CGU’s policy did not cover underinsurance, for which Burke sought compensation from Royal.
Royal argued – and the trial court agreed – that the policy exclusion applied because Burke was the “true” owner of both the Peterbilt and the Chevy pickup truck. The insurer noted the intention of the exclusion is clear: when an insured co-owns several vehicles, separate underinsurance coverage must be bought for each vehicle.
In line with Royal’s position, the lower court found Burke was the only officer and shareholder of 1021256 Ontario Inc., which, in turn, was the sole registered “owner” of the Peterbilt involved in the accident.
But the appeal court overturned the lower court’s decision. The appeal court found the trial judge had erred in piercing the veil of corporate secrecy to establish Burke’s sole ownership of the numbered company, when in fact none of the parties had made an argument to lift the veil in their pleadings.
In its decision, the appeal court noted that the concept of “ownership” was vague in both the policy and in the statutes. “The words ‘owns’ and ‘owner’ are not defined in the NBEF 44 or the policy,” the court found. “Nor are they defined in the Insurance Act.”
In some cases, the term refers only to registered owners. In others, it refers to both the registered and the “true” owners.
The appeal court noted the law requires it to take the broadest possible meaning, so that ownership might encompass more than just the “true” owner (as argued by Royal). And in this case, the registered owner was a named company, not Burke himself.
The full case can be found at:
http://www.canlii.org/en/nb/nbca/doc/2011/2011nbca98/2011nbca98.html