In Hill v Intact Insurance Company, the homeowners, who were being sued in a separate negligence action, applied to the court to declare that their insurer, Intact Insurance, has a duty to defend them in this action. Intact Insurance disagreed, claiming that the liability portion of the Hills’ homeowner policy did not apply to the accident that was the basis of the liability suit against them. The insurer also disagreed with the homeowners on whether the allegations of negligence arose from the policyholder’s actions or from the ownership of their properties, a difference which the insurer contends will impact whether or not the insured’s Policy covers them for the alleged negligence.
This case arose after a man was seriously injured by a falling tree on a Rideau River recreational property owned by the Hills. The injured man filed a civil suit against the Hills for compensatory damages for his injuries. The Hills had homeowner’s insurance for their Ottawa residential property, but the insurance coverage for their Rideau River recreational property had not been renewed two years prior to the accident because the insurer stated that their recreational property was uninsurable. Thus, when the accident occurred in August 2012, the only liability insurance coverage in place for the Hills was for their Ottawa home.
Leading up to the accident, the Hills hired a contractor to remove trees from their Rideau River property and in the course of doing so, the plaintiff was seriously injured by a falling tree. The plaintiff alleged that the Hills had for some time ignored Orders by the Municipality to remove trees that did not conform to the standards of maintenance, and which they knew to be dangerous and damaged. Further, the contractor the Hills finally hired to remove the offending trees was a driveway sealer (not a professional arborist) who subsequently subcontracted the work to an allegedly incompetent and non-certified arborist. The plaintiffs concluded that the Hills failed to take actions that any reasonable land owner would have taken to remove the unsafe trees, and this failure was in violation of the Municipality’s by-laws. Finally, it was alleged that if the trees had been promptly and properly removed by a competent arborist, then the accident and injuries would never have happened.
Specifically, in his negligence suit against the Hills, the injured man made the following complaints:
- The Hills were negligent in failing to hire a competent contractor or a competent arborist to remove the trees.
- They were liable as owners of the Rideau River property under the Ontario Occupiers’ Liability Act.
- They were also negligent for failing to remove trees that were dangerous, in compliance with the Municipality’s Orders.
In determining whether the Hills’ homeowner’s insurance policy under Intact Insurance does, in fact, apply to their recreational property, the court examined the following wording pertaining to their liability coverage:
We will pay all sums which you become legally liable to pay as compensatory damages because of unintentional bodily injury or property damage arising out of:
1. your personal actions anywhere in the world
2. your ownership, use or occupancy of the premises defined in Section II.
The second part of the Hill’s liability coverage pertains to occupier’s liability, but only their Ottawa home was listed under “the premises defined in Section II” on their policy.
The judge in this case agreed that failure to hire a competent contractor and failure to remove an unsafe condition such as a dangerous tree, fall under the domain of the Occupier’s Liability Act. However, such actions can also be said to relate to actions that the applicants undertake “anywhere in the world”.
The judge concluded that the wording in the Policy is “clear and unambiguous” in its provision that the insurer will pay for damages arising from unintentional bodily injury resulting from personal actions (by a specific person) that may have occurred anywhere in the world. Whether or not the plaintiffs were negligent in failing to employ a competent contractor, their actions were those of an individual policy holder and as such, would fall within the stated liability coverage (given the absence of other exclusions within the Policy). In conclusion, although the claim may fall within the domain of the Occupier’s Liability Act, there are no exclusions for personal actions that may arise out of ownership, use, or occupancy of an uninsured premises; therefore, the first part of the Hill’s liability coverage applies to the accident. It then follows that Intact Insurance is obligated to defend the claim against the Hills.
“The law on the duty to defend is well established. The general rule is that if the pleadings against the insured allege facts which, if proven, would fall within coverage, the insurer is obliged to provide a defence regardless of the truth or falsity of such allegations.”
In order to prevent a conflict of interest between the insurer and the applicants, the court made several directives, including a requirement that a different firm defend the Underlying Action (i.e. negligence claim against the Hills); assurance that reports be provided concurrently to the insurer and the insureds (the Hills) during the Underlying Action; and a requirement that different claims examiners deal separately with coverage and liability issues.
An insurance company is a commercial enterprise and in the business of making money, and accordingly, may dispute any type of claim if they perceive any ambiguity or potential exclusions that provide possible grounds for denying a claim. This applies to a variety of situations, including personal injury claims by the insured or if the insured is being sued by another injured party. However, if the facts of the insured’s liability coverage show that the policy applies to a given circumstance then the insurance company’s duty to defend the policyholder is triggered. If your insurance company has denied your coverage or claim, call the experienced attorneys at Kotak Law to represent your interests and hold the insurers to their legal obligations.