Spouses don’t have to live under the same roof to qualify for family protection auto coverage

Editor’s Note: This article has been corrected to show that the Motor Vehicle Accident Claims Fund (MVACF) has a $200,000 maximum legal liability and not $250,000, as initially reported. Canadian Underwriter apologizes for the error.

Spouses don’t have to live together under the same roof to be eligible for family protection coverage under an auto insurance policy, the Ontario Superior Court has ruled.

In making its decision, the court found the more holistic “family law” approach to spouses should be applied to the OPCF 44R family protection endorsement in an auto policy, rather than the more restrictive definition of spouses found in case law for no-fault accident benefits under Ontario’s Insurance Act.

Under the Insurance Act, the definition of spouses includes the stipulation that couples are “living together,” which has been interpreted in previous case law as “residing under the same roof.”

“The mere fact of not residing in the same dwelling house, in the circumstances of this case, cannot be a reason to find that Yvonne [Moelker] and Larry [Hamel] do not fit the definition of spouse,” the court ruled. “It is important to observe that many spouses who are not married cannot reside in the same dwelling for uninterrupted periods of time because of serious medical issues of the other spouse. Nevertheless, they are no less loving spouses than those who do not have [these] similar health challenges.

“If this matter is allowed to proceed, Larry must fit within the definition of spouse under both s. 61 of the Family Law Act and the OPCF 44R family protection endorsement of the insurance policy.”

Larry Hamel was struck by an unidentified vehicle on Sept 20, 2019, and died of his injuries one month later. Yvonne is the sole named insured under an auto insurance policy issued by Security National.

Yvonne, Larry’s siblings, and the litigation administrator of Larry’s estate, sued the unidentified driver and owner of the car that hit Larry, as well as Security National and the Motor Vehicle Accident Claims Fund (MVACF).

Theoretically, when a tort action is commenced against an unidentified driver, the insurer takes take the place of the unknown driver where the person launching the lawsuit is named in the insurance policy. But in this particular case, if the court found the family protection endorsement of Security National’s auto policy did not apply, then MVACF would step in and defend the case.

The difference is that MVACF has a $200,000 legal liability limit instead of the $1 million limit under Security National’s policy.

Security National argued that, even though Yvonne and Larry had been in a serious long-term relationship at the time of the accident, Larry did not meet the definition of “spouse” in Yvonne’s auto policy because the couple did not reside under the same roof. Since the insurer found Larry was not a “spouse” or insured person under the policy, Security National brought a summary judgement notice seeking dismissal of the legal action against it.

In a decision released Wednesday, the court noted Yvonne and Larry did not live together because of Larry’s mental health issues. He was diagnosed with a bipolar condition and went to hospital various times over the course of their 27-year relationship, the court observed. They lived together between 1992-95, but the arrangement was untenable, Yvonne testified.

“Yvonne gave evidence that they could not reside in the same dwelling for extended periods of time due to Larry’s mental health challenges,” the Ontario Superior Court ruled. “He was diagnosed with bipolar disorder in or around the year 2000. When Larry was in a manic phase, being with him was intolerable. He was hospitalized due to his mental health issues and was discharged in April of 2000. Yvonne did not end their relationship during these periods. They simply could not be in the same residence.”

In almost all other respects, the court noted, they were in a serious committed relationship.

The court observed the case law put forward by Security National to support its position relied on decisions related to auto accident no-fault benefits, which included a more restrictive definition of “spouse” than found in the province’s Family Law Act.

Ultimately, the court ruled it made no sense to use the expansive definition of spouse in family law to establish that the family could sue in tort, and yet use the less restrictive definition of spouse under no fault accident benefits legislation to determine whether coverage was available under the family protection endorsement.

“In my view, it simply does not make any logical or statutory interpretive sense to allow someone who would qualify as a spouse under section s. 61 of the [Family Law Act] to sue in tort by adopting the more holistic and expanded definition of spouse and then, once they are within the OPCF 44R endorsement of a life insurance policy, they would be eliminated by a more restrictive definition of spouse for insurance purposes,” the court ruled.

“I adopt the more expansive and holistic interpretation of spouse. In my view, it is necessary when considering the concepts of dependency that are also dealt with in the Insurance Act and numerous insurance policies.”

Feature image courtesy of iStock.com/Emir Hoyman