Featured Case Study: Royal & Sun Alliance Insurance Company of Canada v. SNIC
In its recent decision of Royal & Sun Alliance Insurance Company of Canada v. SNIC, the Ontario Superior Court of Justice (the "Court") considered the priority of a travel policy and auto policy to pay out of province medical expenses. Both insurers claimed they were excess to each other, with the travel insurer relying upon the Ontario Court of Appeal's ruling in RBC Travel Insurance Company v. Aviva Canada Ltd. ("RBC Travel"), which limited the application of section 268(6) of the Insurance Act (which legislates all other insurance policies to be "excess" insurance to auto policies). However, the auto insurer's counsel (Michael Kennedy with McCague Borlack LLP) successfully argued that RBC Travel should be distinguished, resulting in the auto policy being held to be excess due to section 268(6).
On July 12, 2019, Steve Germain ("Germain") was injured in a motor vehicle accident in the State of Nevada and, as a result, required emergency medical services in Nevada. At the time of the accident, Germain was insured under two policies: (1) a standard Ontario automobile policy (the "Auto Policy") issued by Security National Insurance Company ("Security National") and (2) a travel insurance policy (the "Travel Policy", which was available as a benefit via Germain's credit card) issued by Royal & Sun Alliance Insurance Company ("RSA"). RSA paid for certain out-of-province medical expenses pursuant to the terms of the Travel Policy.
RSA sought reimbursement from Security National for the amounts paid. Security National brought a motion for summary judgment dismissing the claims of RSA. The Court ultimately held that McCague Borlack LLP's client was entitled to summary judgment.
section 268(6)...automobile policy is excess insurance to any other insurance not being automobile insurance
At issue was the application of section 268(6) of the Insurance Act, which provides that an automobile policy is "excess insurance to any other insurance not being automobile insurance of the same type indemnifying the injured person or in respect of a deceased person for the expenses." However, in RBC Insurance, the Ontario Court of Appeal limited the application of section 268(6) by ruling that the legislative section did not automatically render all non-auto policies excess if the wording of such policies clearly made them second payor to auto policies. The Court of Appeal held that the travel insurance policy, based on its contractual wording, was excess to both Provincial Health Insurance and any other insurance plan under which the insured had coverage. As such, the travel policy at issue in RBC Insurance did not, by its wording, provide first payor coverage and instead only provided excess insurance where other coverage (including an auto policy) existed for the same loss.
RSA argued that the RBC Insurance decision was determinative of the issue as to which insurer provided excess coverage to Germain, specifically that the Travel Policy was excess to the Auto Policy.
During argument, Security National argued that while the RSA Travel Policy provides that it is excess to a government health insurance plan, it does not state that it is excess to any other insurance that may provide coverage for medical expenses. As a result, the clear wording of the Certificate for Out of Province Emergency Travel Medical Coverage of the Travel Policy indicates that the Travel Policy is excess only to a government health insurance plan and not excess to other insurance plans, including auto policies.
The Travel policy does not have sufficiently clear language indicating that the Travel Policy only provides excess coverage.
RSA attempted to rely upon a section of the Travel Policy which stated that it would seek reimbursement from the government health insurance provider or any other medical insurance plans [emphasis added] which provide coverage. However, the Court held that the fact that RSA will seek reimbursement does not mean that it is excess to other insurance. The Travel policy does not have sufficiently clear language indicating that the Travel Policy only provides excess coverage. In addition, the Trip Cancellation Certificate of the Travel Policy states that "subject to applicable law, any of our policies are excess insurance and are the last payors." While the Trip Cancellation Certificate provides that it is excess insurance, similar wording was not found in the Out of Province Emergency Travel Medical Coverage of the Travel Policy, which only explicitly states that it is excess to what is covered under a government health insurance plan.
As a result, the Court ruled that RSA is not entitled to rely on the wording of the Trip Cancellation Certificate to argue that its Travel Policy provides excess coverage. The fact that RSA used language indicating that the coverage is excess in its Trip Cancellation Certificate but did not do the same in the Travel Policy's Out of Province Emergency Travel Medical Certificate reasonably shows pursuant to the principle of expression unius est exclusio alterius ("the expression of one thing is the exclusion of the other") that it was not RSA's intention to make the Out of Province Emergency Travel Medical Coverage excess to all other sources of recovery. The Court held that if RSA intended to make its Travel Policy excess, the Travel Policy could have explicitly stated that it was excess coverage as was the case in RBC Travel. The Court pointed to the fact that in RBC Travel, the travel insurer used specific language indicating that they were the "second payor" and that the travel policy was excess to other insurance plans. In RSA's Travel Policy, it does not state that the out of province medical coverage is excess coverage to "any other insurance or benefit plan", nor does it state that it is a second payor.
The Court consequently held that section 268(6) of the Insurance Act applies despite the Court of Appeal's RBC Travel decision. As a result, Security National's Auto Policy was found to be excess to any other policy that provides first payor coverage, meaning that RSA is obligated to pay for Germain's out of province medical expenses. Security National's motion for summary judgment was granted, with costs.
The Court's decision provides clarity on the applicability of section 268(6) of the Insurance Act and what non-auto policies need to explicitly state in order to override the legislation holding auto policies to be excess.
Overall, this decision exemplifies how the specific language used in a policy ultimately dictates whether the policy is deemed to provide first payor coverage.
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