In Unifund Assurance Company v. D.E.,1 the
Ontario Court of Appeal ruled that the parents of a school-age
bully are not covered for their negligent supervision under their
home insurance policy.
We recently reported on D.E. v. Unifund Assurance
Company,2 a trial level decision where the Court
declared that an insurer, Unifund, had to defend and indemnify
parents of an alleged school-age bully. The decision was overturned
and the Court of Appeal's reasoning is precedent-setting and
instructive to both insurers and policy holders.
A claim was brought against the minor daughter of D.E. and L.E.
(the "parents"), and two other Grade 8 students, for
allegedly bullying a fellow classmate, causing her physical and
psychological injuries. The parents were also sued for their
alleged failure to control their daughter and prevent the
The parents were insured under a comprehensive homeowners'
policy that provided for liability coverage if their personal
actions unintentionally caused bodily injury or property damage.
The parents successfully obtained a declaration that Unifund had a
duty to defend and indemnify them in the underlying action. Unifund
On appeal, the primary issue was whether either of two exclusion
clauses in the policy saved Unifund from having to defend and
indemnify the parents.
Justice MacPherson, writing for the Court of Appeal, relied on
the three part test set out in Non-Marine Underwriter,
Lloyd's of London v. Scalera,3 regarding an
insurer's to duty to defend and indemnify:
whether the legal allegations against
the insured are properly pleaded;
whether any claims are entirely
derivative in nature;
whether any of the properly pleaded,
non-derivative claims could potentially trigger the insurer's
duty to defend.
Justice MacPherson found that the first two criteria were easily
met, so he zeroed in on the third part of the test: whether the
properly pleaded, non-derivative claims against the parents
triggered Unifund's duty to defend. He noted that the claims
against the parents were described in terms such as "failure
to take disciplinary action" and "failure to discharge
their duty to prevent the continuous physical and psychological
harassment." When compared with the dictionary definition of
negligence, which includes "failure to take proper care over
something", he found that the claims against the parents were
squarely grounded in negligence.
Justice MacPherson then turned to one of the two exclusion
clauses in the policy, which precluded coverage for:
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.
He dismissed the lower court's finding of ambiguity, which
was based on the lack of "express language" addressing
whether "negligent failure to prevent physical abuse or
molestation" was excluded under the policy. In support of this
finding, he referred to a similar decision, where it was held that
the policy excluded coverage for precisely the type of claim made
against a babysitter for negligent supervision.
Justice MacPherson concluded that the exclusion clause was clear
on its face and it applied to the claims as pleaded against the
parents. As a result, he declared that Unifund did not have a duty
to defend or indemnify the parents in the underlying lawsuit.
This decision makes it clear: neither school-age bullies nor
their parents will be covered under a homeowners' insurance
policy that contains this specific exclusion. As bullying, and now
particularly cyber-bullying, remains a sensitive issue for many
Canadian schools, we expect this decision will have a precedential
effect on similar claims. While insurers are entitled to choose
what they cover, these cases always raise the question of how a
policy that does not cover negligence that causes bodily injury can
be referred to as "comprehensive". It is also notable
that at least one other insurer's standard policy exclusion
simultaneously refers to "the failure to supervise and the
negligent supervision of any person".
1. 2015 ONCA 423.
2. 2014 ONSC 5243.
3. 2000 SCC 24.
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