Insured injured in accident cannot claim costs beyond statutory minimum: NB Court of King’s Bench

The NB Court of King’s Bench found that the insurer with no duty to indemnify due to the insured's intentional acts is not liable for costs and interests beyond the statutory minimum amount.

Pembridge Insurance Company brought a motion seeking an order allowing it to pay into court the sum of $200,000 in full and final satisfaction of their obligations under a policy of insurance. The case arose from various actions filed following a motor vehicle accident. Pierrette Landry was driving a vehicle that crossed the centreline and struck a second vehicle, allegedly injuring multiple plaintiffs. Pembridge was Landry's insurer.

Pembridge investigated the accident and found that Landry had intentionally crossed the centreline in an attempt to commit suicide. Pembridge had insured her vehicle under a standard automobile policy. Pembridge asserted that since the accident resulted from a deliberate action taken by the insured, the insurer's obligations to the injured plaintiffs were limited to $200,000 as set out in s. 243 of the Insurance Act. The NB Court of Appeal upheld Pembridge's position, confirming that the insurer's obligation was limited to $200,000.

Payment of costs and interests

The plaintiffs have filed actions against their insurers, seeking payment of damages exceeding $200,000. The issue before the Court of King's Bench was whether Pembridge was liable to pay costs and interests in addition to the $200,000 limit available under its policy. The court ruled to absolve Pembridge from paying costs and interests more than the statutory limit.

Pembridge argued that it has no duty to defend and no obligation to pay costs or interests beyond the statutory minimum of $200,000 following the court's earlier determination that there was no contract of indemnity in place due to Landry's intentional act.

The court considered the case of Ly v. Nguyen, 1999 ABQB 1032. The court ruled that the insurer was only required to pay the $200,000 statutory minimum because the insured had violated a clause of the standard automobile policy. The court ruled that interests and costs were not payable in addition to the statutory minimum.

No duty to indemnify

The court analyzed the wording of the Insurance Act and the standard automobile policy and found that the payment of interests and costs presupposes a valid contract of insurance in place and a duty to indemnify between an insurer and an insured. This fundamental component does not exist in the present matter.

The court emphasized that Pembridge has been relieved of its duty to indemnify under the policy because of the conduct of its insured. As a result, Pembridge is only required to pay the statutory minimum, and it would be relieved of its obligations to the plaintiffs upon payment of the $200,000 into court.