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Supreme Court of Canada: CPP not Deductible in Nova Scotia Under-Insured Case

If I am injured in a crash and the at-fault driver is unable to pay for my losses, will I recover differently from my under-insured motorist protection policy?  Is the law across Canada consistent on this point?

Some benefits a Plaintiff recovers are deductible from the amount they will recover from the at-fault driver (recovery usually through the at-fault driver’s liability insurance). The deduction is to prevent double-recovery. CPP benefits are not deductible, because they are technically something that the Plaintiff contributes to, and therefore aren’t the same as “benefits” for the purpose double-recovery. Excess insurance policies are subject to different limits than liability insurance policies. Today’s decision is about those limits and CPP benefits.

In a decision released earlier this week (Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7) the Supreme Court of Canada rejected the insurance company’s attempt to reduce the amount payable to a victim under their excess insurance policy.  The case had previously gone to trial for the injuries and losses suffered as a result of Nova Scotia motor vehicle collision, and the jury at trial had awarded the Plaintiff  $465,400.00. The at-fault driver had insufficient insurance coverage to pay the amount awarded by the jury (the Plaintiff collected just $382,000.00 from the at-fault driver). The Plaintiff sought to recover the shortfall from their under-insured motorist protection policy.

The insurance company argued that CPP benefits received by the Plaintiff should be deducted from the amount payable from the under-insured motorist protection policy, based on the wording of the relevant legislation. The Supreme Court of Canada disagreed, ordering that the insurance company could not deduct the CPP benefits from the amount payable:

[2]                              The Endorsement stipulates that future benefits from a “policy of insurance providing disability benefits” are deducted from the shortfall in determining the amount payable by the insurer (cl. 4(b)(vii)). The issue in this appeal is whether the Canada Pension Plan  (CPP ) is a “policy of insurance” for that purpose.

[3]                              The trial judge in this case found that CPP  benefits were not benefits from a “policy of insurance” under the Endorsement and thus would not be deducted from the amount payable by the insurer. The Nova Scotia Court of Appeal disagreed, concluding that the CPP  was a “policy of insurance” under the Endorsement.[1]

[4]                              I agree with the trial judge. The ordinary meaning of the words at issue is clear, reading this Endorsement as a whole. An insurer cannot rely on its specialized knowledge of the jurisprudence to advance an interpretation that goes beyond the clear words of the policy. An average person applying for this additional insurance coverage would understand a “policy of insurance” to mean an optional, private insurance contract and not a mandatory statutory scheme such as the CPP . Thus, future CPP  disability benefits do not reduce the amount payable by the insurer under the Endorsement.

Applicability in BC: In BC the wording of the relevant legislation on this point (the Insurance (Vehicle) Regulations s. 148.1(1)) explicitly states that CPP disability benefits are deductible from the amount paid or payable by ICBC. This explicit deduction differentiates BC from Nova Scotia, and therefore this decision is unlikely to change the fact that for people injured in BC, the amount received in CPP benefits is subtracted from the amount payable by ICBC for under-insured motorist protection.

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