In the 2015 Court of Appeal decision in Unifund
Assurance Company v. D.E., the issue of whether one's home
insurance company has to defend their insured with regard to
allegations of negligence in failing to stop their daughter from
bullying, was addressed. The Court of Appeal overturned the
application judge's decision and declared that Unifund does not
have a duty to defend or indemnify the parents regarding the
In this case, the parents of an alleged bully had a claim
advanced against them in negligence; failure to control their
daughter from bullying and causing physical and psychological
damage to another classmate. The parents brought an application
seeking a declaration that Unifund had a duty to defend and
indemnify them. The Application Judge declared that Unifund had a
duty to defend and indemnify the parents. Unifund appealed based on
2 exclusion clauses in the insurance policy.
The allegations against the parents of the all of
"bullying" children, including these parents were that
were negligent in that they, inter alia, knew or ought
to have known that the minor defendants were bullying K.S. and
failed to investigate, failed to take steps to remedy the bullying,
failed to take reasonable care to prevent the bullying and
harassment of K.S. by the minor defendants of which they were
aware, failed to take disciplinary action against the minor
defendants, and failed to discharge their duty to prevent the
continuous physical and psychological harassment by the minor
defendants for whom they are responsible in law.
Unifund relied on the following sections of the policy with
regard to denying the duty to defend:
SECTION II – Liability Coverage
Coverage E – Personal Liability
This is the part of the policy you look to for protection if you
are sued. We will pay all sums which you become legally liable to
pay as compensatory damages because of unintentional bodily injury
or property damage arising out of:
1. your personal actions anywhere in the world....
Exclusions – SECTION II
We do not insure claims arising from:
6. bodily injury or property damage caused by an intentional or
criminal act or failure to act by:
(a) any person insured by this policy; or
(b) any other person at the direction of any person insured by
7.(a) sexual, physical, psychological or emotional abuse,
molestation or harassment, including corporal punishment by, at the
direction of, or with the knowledge of any person insured by this
(b) failure of any person insured by this policy to take steps
to prevent sexual, physical, psychological or emotional abuse,
molestation or harassment or corporal punishment.
Unifund's position was that that the claim against the
parents in negligence "flowed from or was derivative of the
claim against their daughter arising out of her intentional conduct
of assault, threatening and bullying; accordingly, exclusion clause
6 applied." The application judge also rejected that Clause
7(b) precluded coverage. The Court of Appeal disagreed and found
that the exclusions applied and were unambiguous.
Insurance policies must be interpreted in accordance with the
well-established rules of policy interpretation:
contra proferentem -
ambiguities in insurance contracts are to be construed against the
coverage provisions should be
interpreted broadly and exclusion clauses should be interpreted
at least where the policy wording is
ambiguous, effect should be given to the reasonable expectations of
Reid Crowther & Partners v. Simcoe & Erie General
Insurance,  1 S.C.R. 252 at paras. 37 and 42
However, in this case, the policy exclusions were not found to
be ambiguous and therefore, were found to apply.
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