In Smith v. Taylor and Aviva Canada Inc., (2004) a legal battle unfolded in the Court of Appeal regarding the tragic death of Ken Schlimme in a motorcycle accident on August 18, 2017. The defendant driver, Robert Taylor, ran a stop sign, causing the fatal collision. Kerry Smith, Schlimme's common-law spouse, sued Taylor and Aviva for $3.5 million in damages, including financial dependency losses.
Aviva denied coverage under both the Ontario Policy Change Form 44R (OPCF 44R), which provided $1 million in family protection, and the "Excess Endorsement" included in Schlimme’s homeowner's policy. The insurer argued that Taylor’s insurance matched Smith’s OPCF 44R coverage, meaning he wasn’t considered an "inadequately insured motorist," and therefore Aviva was not responsible for further payment.
The lower court agreed with Aviva, but the Court of Appeal reversed this decision. It ruled that the Excess Endorsement provided additional coverage beyond the OPCF 44R, and Taylor should have been considered inadequately insured. Smith also did not need to exhaust her OPCF 44R coverage before claiming under the Excess Endorsement.
This case underscores the importance of understanding how various insurance policies interact to provide coverage, especially when dealing with underinsured motorists. The decision clarifies that "stacking" insurance layers like the Excess Endorsement can enhance protection beyond the limits of a primary policy.
The Benefit for Personal Injury Plaintiffs:
- Access to Higher Damages: Plaintiffs, like Kerry Smith in this case, now have the opportunity to recover larger sums from multiple insurance sources. This can cover higher-value claims, especially in cases involving serious injury, death, or large financial losses (e.g., dependency claims).
- Impact: Plaintiffs may now be more inclined to litigate or settle for larger amounts when there are excess insurance policies in place. This decision supports a much needed change of a more claimant-friendly approach to insurance recovery in personal injury cases.