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The Supreme Court Reconsiders the Meaning of "Accident"

June 2010

The Supreme Court of Canada recently released its decision in the case of Co-operators Life Insurance v. Gibbens, 2009 SCC 59, in which an insured sought coverage under a group accident insurance policy for having contracted a sexual disease after having engaged in unprotected sex with a number of women. Somewhat surprisingly, the Court ruled against the insured based on the concept of an "accident", a necessary precursor to insurance coverage.

The facts of this case are rather straightforward. The insured knowingly engaged in unprotected sex, eventually contracting a sexual disease. The sexual disease led to a further disease, though, which resulted in partial paralysis to the insured. The insured in turn sought coverage under his policy, which covered losses sustained (1) "as a direct result of a critical disease", or (2) "resulting directly and independently of all other causes from bodily injuries occasioned solely through external, violent and accidental means, without negligence". Because the secondary disease suffered by the insured did not fit within the definition of "disease" so as to trigger coverage under part (1) above, the question debated by the Court was whether the insured’s paralysis qualified for coverage under part (2) as "bodily injuries occasioned solely through external, violent and accidental means".

The Court stated that the word "accident" should be interpreted as it would be understood by the average person applying for insurance. While courts have traditionally defined covered "accidents" as "unlooked-for mishaps or untoward events which are not expected or designed", the Court stressed that "infirmities caused by disease in the ordinary course of events" should not be considered accidents to which coverage should apply. Simply put, accident insurance is not comprehensive health insurance, and an "accident" should not include ailments proceeding from natural causes. While the insured’s paralysis was an unexpected consequence of the sexual disease he contracted, it was still a normal consequence which proceeded from natural causes. It was therefore not an accident, and not covered.

This case is of interest to all insurers because of the restrictive definition of accident adopted by the Court. The Court carefully studied the wording of the policy, and also considered the premium paid for said policy, in its determination that only those diseases specifically listed in the policy were covered. Otherwise the policy would be transformed into a comprehensive insurance policy for all infectious diseases, which was certainly not the intent of the parties (in light of the wording and premium). The Court therefore applied the "reasonable expectations" doctrine to the benefit of the insurer, an approach which should be welcomed by insurers as a logical and fair approach to coverage analysis, inasmuch as policies should be interpreted to accord with the reasonable expectations of both the insured and the insurer.

As always, the resolution of coverage disputes depends on the specific fact scenario and policy wordings in issue, so we recommend that insurers contact us with any coverage questions.


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