In Traders General Insurance Company v Gibson, 2019 ONCA 985,the Court of Appeal for Ontario concluded that an insured is not eligible for coverage under a homeowner's insurance policy when another family member who resides in the home sustains injuries on the premises.
Ms. Gibson was insured with Traders General Insurance Company. Her 60-year-old daughter commenced an action against her for damages resulting from a fall from the porch of the house. Both mother and daughter were tidying the porch.
Ms. Gibson's policy contains an exclusion of coverage for claims made against her arising from "bodily injury to ... any person residing in your household other than a residence employee."
The issue on the appeal was whether Ms. Gibson was entitled to a defence and indemnity against her daughter's claim, either as a residence employee or as a tenant. The essence of the dispute between the parties on this appeal was the interpretation of the policy provisions.
The application judge held that Ms. Gibson was entitled to coverage for the daughter's claim, because the daughter was a tenant. The Court of Appeal disagreed.
Ms. Gibson's homeowner's policy defines "Insured" as "the person(s) named as insured in the Certificate of Property Insurance and, while living in the same household: 1) his or her spouse; 2) the relatives of either; and 3) any person under the age of 21 in their care."
The policy provides coverage for the following cases:
Compensatory damages for an unintentional bodily injury with the following exclusion:
"We do not insure claims made against you arising from: bodily injury to you or any person residing in your household other than a residence employee ..."
The policy defines "Residence Employee" as follows:
"Residence Employee" means a person employed by you to perform duties in connection with the maintenance or use of the premises. This includes persons who perform household or domestic services or duties of a similar nature for you. This does not include contractors or sub-contractors. It also does not cover persons while performing duties in connection with your business.
Of note, the policy does not refer to tenants.
The Court of Appeal reviewed the application Judge's decision on a standard of correctness. In its review, the court found that there was no rental agreement in place, and both mother and daughter share in chores and contribute to the costs of the home. The lack of a written contract precluded a finding that the daughter was a "residence employee", as there was no employer / employee relationship. The daughter was also not a tenant.
The court reiterated the principles for interpreting insurance policies, noting the following:
Coverage provisions should be construed broadly, exclusion clauses should be construed narrowly, and ambiguities should be construed against the insurer."
With that in mind, the court considered the following factors of whether:
- The person contributes to the household in a meaningful way through time and/or resources for the benefit of the collective good of the household;
- The person shares common space with other members of the household; and
- The person is motivated by an interest in the life of all members of the household.
The relationship between the mother and daughter was not, in essence, a workplace arrangement, and it did not go beyond performing household chores for their mutual benefit. As such, the daughter was not a "residence employee" excepted from the policy exclusion. Therefore, the Court of Appeal determined that the application judge erred in the interpretation of the policy. The policy is clear that all persons residing in the insured's household are excluded from coverage unless they are residence employees. This is so regardless of whether they pay rent.
The court decided that Ms. Gibson is not entitled to a defence and indemnity against her daughter's claim.
In most cases, coverage will not be extended to insured individuals when other family members are injured within their home. However, in some instances, if the work performed by the injured family member goes beyond chores and is of significant importance to a family business, a "residence employee" definition could be met.
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