Territorial limit in policy applies to underinsured motorist endorsement

The territorial limitation contained in an automobile insurance policy and in the Insurance Act restricts coverage provided in the underinsured motorist endorsement, the Ontario Court of Appeal ruled on July 3.
In Pilot Insurance Company v. Sutherland, the Appeal Court ruled the territorial restriction in a policy applied to the underinsured motorist endorsement. The decision effectively excluded underinsured coverage for a motor vehicle accident in Jamaica that left Everett Sutherland seriously injured with quadriplegia.
Sutherland and his family members were insured under a policy issued by the Pilot Insurance Company. As insureds under the policy, the Sutherlands purchased the optional endorsement, which provided additional coverage equal to what they would have received if the inadequately insured motorists at fault for the accident had Cdn$1 million of coverage.
The court noted the potential at-fault parties in the Jamaica accident both had insurance coverage limited to about Cdn$18,400 per policy. For this reason, they came within the endorsements definition of an inadequately insured motorist, since their insurance was less than the family protection coverage provided by the endorsement.
The money payable under the Jamaican policies was payable ahead of coverage under the endorsement, but would be inadequate to cover Sutherlands injuries.
The policy wording included a territorial limit: This policy covers you and other insured persons for incidents occurring in Canada, the United States of America and any other jurisdiction designated in the Statutory Accident Benefits Schedule, and on a vessel travelling between ports of those countries.
The endorsement did not include a territorial limit, but said: Except as otherwise provided in this change form, all limits, terms, conditions, provisions, definitions and exclusions of the policy shall have full force and effect.
A lower court judge interpreted the endorsement to state that the terms of the policy [including the territorial limit] apply [e]xcept as otherwise provided in the endorsement. Since the endorsement did not include a territorial limit, the judge awarded the Sutherlands the underinsurance coverage.
But in her decision, written for a panel of three judges, Ontario Appeal Court Justice Susan Lang overturned the lower court decision. In my view, on a plain reading, Section 22 of the endorsement incorporates the territorial limitation set out in Section 1.2 of the policy, she wrote. The endorsement specifically provides that the limits in the policy are in full force and effect [e]xcept as otherwise provided in this change form.
Since the policy explicitly sets out a territorial limitation, and the change form or endorsement does not set out a territorial limitation, it follows that the policys territorial limitation governs.