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Ontario court upholds legal distinction between “uninsured” and “underinsured” coverage


August 18, 2010   by Canadian Underwriter


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Ontario’s Superior Court has dismissed a motor vehicle claim on the basis that optional “underinsured” coverage is distinct from mandatory “uninsured coverage.”
In Hammond v. State Farm Mutual, Keira Hammond was an infant pedestrian along with three others when was struck in 1997 by a vehicle owned by a man referred to in the judgment as ‘Mr. Hang.’
State Farm insured Hang for up to $1 million. Hang also had optional OPCF 44 Family Protection coverage (underinsured coverage), which is optional.
“There is no doubt that Hang was underinsured at the time of the subject accident and that was obvious to all throughout the litigation,” Ontario Superior Court Justice Harrison Arrell wrote in his decision.
Statements of claim were dismissed by consent in 2004 as a result of the claims settling. But Hamilton trial lawyer Lou Ferro, representing Hammond, tried to re-open the claim in March 2008.
He argued Hammond’s claim should be re-instated after the expiry of the limitation period because McArdle v. Bulger in 2007 clarified who is eligible for Family Protection benefits under ss. 224(1) and 265 of the Insurance Act.
But s. 265 comes under the heading “uninsured automobile coverage,” Arrell observed. Such mandatory, statutory coverage is not the same as optional “underinsured” coverage.
“The plaintiff…argues that s. 265 of the Insurance Act assists her as a person legally entitled to recover under the policy,” Arrell wrote. “I reject that argument as the person specifically refers to ‘uninsured’ and ‘unidentified’ coverage, being the mandatory coverage imposed by the act.
“There is no mention of ‘underinsurance’ coverage in that section, that coverage being optional.”
Arrell dismissed the claim, finding in favour of State Farm.