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THE INSURANCE CONTRACT - Interpretation

Thursday, May 14, 2020 @ 10:00 AM  


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Appeal by the defendant insurer from an order dismissing its motion for summary judgment and granting judgment to the respondents. The motion judge found that the appellant had a duty to defend the respondents under the policy of professional liability insurance issued by the appellant. The appellant issued a professional liability master policy to the Appraisal Institute of Canada (AIC) which related to claims made against AIC members and their personal corporations and employers for the negligent provision of professional appraisal services by members. The respondent H was a professional appraiser and member of the AIC. H and his company were insured under the master policy and an individual certificate issued by the appellant. B, an appraiser also insured under the master policy and his own individual insurance certificate, was sued for negligently appraising a residential property while working for H. B brought a third-party claim against H, who made a claim under his policy with the appellant. When the appellant denied coverage, H commenced the underlying action against the appellant for a declaration that the appellant had a duty to defend and indemnify them under the H’s insurance contract in response to the proceedings against B. The motion judge reviewed the pleadings, interpreted the definitions under the master policy, but did not consider the significance of the separately issued certificates and concluded that the appellant had a duty to defend.

HELD: Appeal allowed. The duty to defend was a contractual obligation. The motion judge erred in his interpretation of the insurance contract with H by effectively treating a master policy as the entire insurance contract for all members of the AIC. This misconstruction caused the motion judge to conflate the H and B insurance contracts that shared standard terms set out in a master policy. In this case it was necessary to distinguish between the insurance contracts and the documents evidencing their terms. The master policy merely set out the terms of professional liability insurance being offered to the members of the AIC. The certificates issued to the appraisers evidenced a separate insurance contract on terms including those set out in the master policy. According to the terms of the H insurance contract, there was no duty to defend in this case as the contract only covered H’s professional negligence. Only H was identified as an insured. However, whether the appellant had a duty to defend H under B’s policy was not decided by the motion judge and required determination on a complete record after full argument.

Van Huizen v. Trisura Guarantee Insurance Co., [2020] O.J. No. 1182, Ontario Court of Appeal, A. Hoy A.C.J.O., K.M. van Rensburg and L.B. Roberts JJ.A., March 18, 2020. Digest No. TLD-May112020008