Two cases recently issued by the Ontario Court of Appeal have
found that insurers do not need to defend or indemnify homeowners
or their children where the children are faced with bullying
The companion decisions of Unifund Assurance Company v. D.E.
("Unifund") and C.S. v. TD Home and Auto Insurance Company ("TD
Home") overturned the trial court's decisions which
found that an exclusion clause in the homeowners' policies was
ambiguous, and therefore not applicable. Both decisions involved
cases of under-age girls accused of bullying and harassing other
children. The victims in these cases sued the children and their
parents, alleging that the parents failed to take steps to prevent
or remedy the continuous harassment of the victims. The parents
argued that their insurer had a duty to defend and indemnify them
under their homeowner insurance policies, which included liability
coverage if their personal actions caused unintentional bodily
In response, the insurers held that a standard exclusion clause
applied. Specifically, clause 7(b) denied coverage where the claim
arose from the insured's failure "to take steps to prevent
sexual, physical, psychological or emotional abuse" or
In Unifund, the trial Court found that, since clause
7(b) was silent on whether it applied to only intentional or
unintentional failures to take steps to prevent harassment, the
clause was ambiguous. As such, the Court interpreted the exclusion
clause narrowly, finding that the clause was limited to intentional
failures but not situations where the failure arose through
negligence. The Court therefore held that the exclusion clause did
not apply and the insurers had a duty to defend. The Court in
TD Home adopted the same reasoning as the trial decision
On appeal of both decisions, the Court of Appeal rejected the
argument that clause 7(b) was ambiguous. Rather, with respect to
the claim against the parents, the Court of Appeal held that clause
7(b) was "clear on its face" and applied to claims of
negligence. As such, the insurers were entitled to rely on the
exclusion clause and deny coverage to the parents.
Unlike TD Home, the daughter in Unifund was
not a party to the application or the appeal. In TD Home,
the Court of Appeal also addressed the insurer's duty to defend
the daughter. In that case, the Court of Appeal noted that the
claims against the daughter were that she "verbally threated
and physically assaulted" the victim at school, in the
community, and via telecommunications. The Court of Appeal held
that clause 6(b) applied, which denied coverage where the claim
arose from an intentional act causing bodily injury. Therefore the
insurer in TD Home did not have a duty to defend and
indemnify the daughter.
The Court of Appeal's companion decisions certainly send a
clear message that children and parents of children accused of
bullying will not be able to rely on a homeowners' policy with
similar exclusions in arguing their insurer has a duty to defend.
Nevertheless, insurers would do well to review their policies and
ensure their exclusion clauses leave little room to be interpreted
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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