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Addendum issued to clarify insurer's responsibility for the first $200,000 of any judgment or settlement.
The respondent requested clarification of a paragraph in the court's previous decision regarding an insurance coverage dispute.
The court issued an addendum clarifying that the respondent is responsible for the first $200,000 of any judgment or settlement against the insured in the underlying action, while maintaining its contractual right to deny coverage to other parties.
An insurer is absolutely liable for the first $200,000 in third-party damages even if the policy was allegedly obtained after the accident.
The applicant, Intact Insurance Company, sought a declaration that the respondent, Aviva Insurance Company of Canada, was obligated to defend and indemnify Charlie Youssef, or at least be responsible for the first $200,000 in damages, following a motor vehicle accident.
Aviva had denied coverage to the vehicle owner, Michael Youssef, alleging material misrepresentation and that the policy was void ab initio because the car was added to the policy after the accident.
The court found that the Aviva policy was effective on the date of the accident, as no specific time was stated, and that Section 258 of the Insurance Act mandates an insurer's liability for the first $200,000 in damages to third parties, regardless of policy voidance due to misrepresentation.
