Kristensen v. State Farm Mutual Automobile Insurance Company, 1999 ONFSCDRS 190

Financial Services Commission of Ontario

Neutral Citation: 1999 ONFSCDRS 190

FSCO A98-001416

BETWEEN:

PETER KRISTENSEN, RYAN KRISTENSEN and WANDA KRISTENSEN

Applicants

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: William Renahan

Heard: August 23, 1999, in Hamilton, Ontario.

Appearances: M. Claire Wilkinson for Mr. Kristensen Philippa G. Samworth for State Farm Mutual Automobile Insurance Company

Issue:

The facts are not in dispute. On November 18, 1996, David Kristensen was involved in a motor vehicle accident. He died the next day from his injuries at the age of 16 years. He was survived by his mother Wanda Kristensen, his father Peter Kristensen and his brother Ryan Kristensen.

State Farm Mutual Automobile Insurance Company ("State Farm") paid the Kristensens funeral and death benefits under the Schedule.¹ The parties did not agree on the amount of death benefits and were unable to resolve their disputes through mediation. The Kristensens applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

At the opening of the hearing, Ryan Kristensen withdrew his claim for additional death benefits.

David Kristensen qualified as an "insured person" under his father's policy with State Farm as a dependant of the named insured. State Farm conceded that David was a dependant of both his mother and father within the meaning of subsection 2(6) of the Schedule. State Farm paid Mr. and Mrs. Kristensen, jointly, a death benefit of $10,000 pursuant to subparagraph 25(2)5(i) of the Schedule. The Kristensens claim that State Farm should pay them $10,000 each.

The issue in this hearing is:

Are Wanda and Peter Kristensen entitled to a death benefit pursuant to paragraph 25(2)5 of the Schedule of $10,000 each or $10,000 to share equally?

Result:

Wanda and Peter Kristensen are entitled to a death benefit of $10,000 each.

ANALYSIS:

Subsection 25(2) provides as follows:

(2) The death benefit shall provide for the following payments:

2. A payment to each of the insured person's dependants, and to each person to whom the insured person had an obligation at the time of the accident to provide support under a domestic contract or court order, of,

i. $10,000, or

ii. if the optional death and funeral benefit referred to in section 27 has been purchased and is applicable to the insured person, the amount fixed by the optional benefit.

3. If no payment is required by paragraph 1, an additional payment of $25,000 to the insured person's dependants and the persons, other than a former spouse of the insured person, to whom the insured person had an obligation at the time of the accident to provide support under a domestic contract or court order, to be divided equally among the persons entitled.

4. A payment of $10,000 to each former spouse of the insured person to whom the insured person was obligated at the time of the accident to provide support under a domestic contract or court order.

5. A payment of $10,000 to,

i a person in respect of whom the insured person was a dependant at the time of the accident,

ii. the spouse of a person in respect of whom the insured person was a dependant at the time of the accident, if the spouse was the insured person's primary caregiver at the time of the accident and the person in respect of whom the insured person was a dependant at the time of the accident dies before the insured person or within 30 days after the insured person, or

iii. the dependants of a person in respect of whom the insured person was a dependant at the time of the accident, if no payment is required by subparagraph i or ii, to be divided equally among the persons entitled.

"Dependant" is defined in subsection 2(6) as:

(6) For the purpose of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person's spouse.

State Farm argued that the death benefit provisions under the 1990 SABS,² the 1994 SABS³ and the 1996 SABS⁴ have consistently provided for one payment of $10,000 to the person or persons upon whom the insured person was a dependant at the time of his death. It relied on the decision in Liberty Mutual Insurance and Harris, (FSCO P98-00015, November 19, 1998) where the Director's Delegate