An obscure motor vehicle accident case in Saskatchewan may have brokers reconsidering the liability policy limits of their no-fault insurance clients.
The Saskatchewan Court of Appeal’s recent decision in Acton v. Rural Municipality of Britannia goes to the heart of the province’s no fault auto insurance system, the government’s insurer contends.
The defendant municipality of Britannia is seeking leave to appeal the decision to Canada’s highest court, with Saskatchewan Government Insurance (SGI) filing for intervenor status.
The Appeal Court essentially ruled that a person who opts for no fault insurance coverage is nevertheless entitled to sue to recover “economic losses,” even if those losses do not exceed the legislative cap of $5 million.
The province’s public insurer is concerned that the decision could undermine the integrity of the no fault system. If people who buy no fault auto insurance coverage can now sue to recover costs lower than the $5-million limit, have they also lost their immunity from being sued?
If drivers who choose no fault auto insurance coverage can now be sued, then brokers will need to review their clients’ no fault policy liability limits, said Tim MacLeod, general counsel for Saskatchewan Government Insurance (SGI). This possibility is not clear at the moment.
“Prior to the decision, the exposure [of no fault policyholders to liability] would be for losses once a$5-million limit on no fault benefits had been exhausted, which in the vast majority of cases would not occur,” said MacLeod. “Instead, they are now potentially exposed to lawsuits even though the $5-million limit has not and will not be exhausted….
“Then liability limits become a bit of an issue, especially for the catastrophically injured people. That’s the thing brokers have to grapple with: Are our clients exposed more? Are their limits sufficient to accommodate that kind of exposure?”
Under the province’s no fault insurance system, distributed through the insurance broker channel, drivers have a choice to buy a no-fault auto insurance benefits package, or to opt out of the no-fault insurance program through a tort election.
Those who select the no-fault option are immune from lawsuit. In other words, people who sue for recovery of damages would launch their lawsuit against the government insurer and not the insured.
The trade-off is that drivers insured under no-fault are not allowed to sue for damages unless their damages exceeded $5 million. Instead, they receive accident benefits payments under a schedule allowed by the law.
Saskatchewan brokers say between 90% and 95% of their clients choose the no fault option.
John Acton was insured under a no-fault policy when he was involved in a single vehicle rollover accident that occurred on May 30, 2004, near Lloydminster, Saskatchewan.
The accident occurred on a road maintained by the rural municipality of Britannia, and left Acton a permanent quadriplegic.
Acton’s no fault benefits did not fully cover his actual costs for rehabilitation, living assistance and other cost-of-care items. Consequently, he sued to recover the difference between what he received in benefits and what he said he was owed for his costs.
The insurer said Acton couldn’t sue for an “economic loss” until his benefits payments exceeded the combined maximum benefits of $5 million. The Appeal Court disagreed, finding that Acton could sue for his economic loss even though the benefits he received did not exceed the $5-million limit.
SGI has filed for intervenor status in a bid to have the Saskatchewan Court of Appeal’s decision reversed in the Supreme Court of Canada. The Supreme Court has not made any decision about whether to grant leave to appeal, and it is not known when the country’s top court will decide whether or not to hear the case.
