When must a CGL provide excess coverage for an MVA?
The British Columbia Court of Appeal recently decided when an auto insurer can take advantage of coverage for excess non-owned automobile liability provided in a comprehensive general liability (“CGL”) policy. This issue was addressed in Canadian Direct Insurance Incorporated v Lombard General Insurance Company of Canada 2013 BCCA 523. Lombard was the underwriter of a comprehensive general liability policy to a first nation. The policy specifically insured the first nation for non-owned automobile liability and it extended coverage to its employees. An employee, Mr. Dunn was involved in a motor vehicle accident (“MVA”) that caused serious injuries; damages or settlements were expected to run into millions of dollars.
At the time of the MVA, Mr. Dunn was living with his father and driving a vehicle his father leased from Ford Credit Canada. The father had purchased primary insurance coverage with ICBC and excess insurance coverage with Canadian Direct Insurance for the vehicle. The Lombard policy, being the CGL policy obtained by the first nation, afforded coverage for liability arising out of the operation of an automobile that was not owned or licensed in the name of any person residing with the insured, in this case being the employee of the insured, Mr. Dunn.
The question was therefore whether the vehicle was owned by the father or was licensed in his name. In either case, the employee was not an insured under the Lombard policy. The court held the father was not an owner of the vehicle. The court reasoned that the terms “owned” and “leased” clearly meant different things in the policy and the word “owned” in the policy could not encompass “leased” vehicles. The court did however find that the father licensed the vehicle and that Mr. Dunn resided with him.
Therefore the employee Mr. Dunn, was not an insured under the Lombard policy, and the CGL did not provide any additional coverage.
Case summary by: Chelsea Lott