Insured's intent to self-harm limits third-party claim against insurer: N.B. Court of Appeal

The New Brunswick Court of Appeal has ruled that an insurer can limit third-party claims to $200,000 where it has the right to deny indemnity to its own client beyond that statutory limit.

In Cooperators General Insurance Company et al. v. Martin et al., 2022 NBCA 15, Pierrette Landry, in an attempt to take her own life, crossed the centre line of a highway in 2014 and collided with a vehicle occupied by Bernadette Martin, Donald Rose, and Jacqueline Blanchard. Landry’s attempt failed and she was convicted of impaired driving causing bodily harm. Landry died in 2019.

Martin applied to the New Brunswick Court of Queen’s Bench seeking declaratory relief holding Landry’s insurer, Pembridge Insurance Company, liable for damages. However, Pembridge denied coverage to the Landry estate beyond the statutory limit of $200,000 as mandated by s. 243 of the New Brunswick Insurance Act, RSNB 1973, c I-12.

Pembridge argued that Landry was committing a “criminal offense … with intent to bring about loss or damage,” which the claimants did not dispute, effectively raising the public policy rule in section 2 of the Act.

Pembridge also argued that “an insurer can raise [section 2] as a defence to any third-party claims exceeding, in the aggregate in this case, the minimum statutory limit of $200,000,” invoking sections 2, 250(1), (4), and (11) of the Act.

As a result, the three claimants commenced actions against their separate insurers in the event the total claims exceeded the statutory limit. Martin was insured by Co-operators General Insurance Company; Rose by Unifund Assurance Company; and Blanchard by Economical Insurance. Blanchard did not take part in the application.

The application judge agreed with Pembridge and ruled that its liability to the third-party claimants was limited to $200,000.

Co-op and Unifund appealed, alleging that the application judge erred in her interpretation of the Insurance Act.

The appellate court disagreed.

It was undisputed that Landry’s actions intended to cause loss or damage, resulting in Pembridge denying her right to claim indemnity as a breach of the act, said the court. Section 250(4) of the Act also did not deprive third parties of their right to recover from Pembridge.

However, the appellate court ruled that “s. 250(11) entitles an insurer to deny payment to a claimant of any amount exceeding the s. 243 minimum limit of $200,000 if the insurer elects to avail itself, as against the claimant, of any defence it is entitled to set up against its insured,” including the section 2 defence.

Thus, the appeal was dismissed.