One thing that is common to all policies of insurance is that they are written in a way that attempts to reflect the risk that an insurer is willing to accept and the risk that a prospective insured is trying to protect against.

One such type of policy is accident insurance.  By its very title, both parties expect there to be insurance available (disability, sickness, life) in the event that an insured is involved in an accident.  That is the easy part.  The more difficult question which often arises after the fact is what is an accident?

The concept of an accident is a simple one, in fact one that all learn from an early age.  The average person can likely easily explain the concept.  An accident that is something that happens which is not intended.  For that reason, many policies of insurance do not contain a definition of accident since it is assumed that the ordinary common sense meaning of the word will prevail.

Unfortunately, that has not always been the case.  If you were to use a common sense approach to the definition of an accident, consider whether the following would fall within the meaning of that term:

a)             Is it an accident when someone addicted to prescription medications overdoses and dies as a result?[1]

b)             Is it an accident when someone with a herniated disc engages in physical activity which results in a spinal cord malfunction?[2]

c)              Is it an accident when someone with a history of seizures has a seizure which causes him to fall, in an awkward manner which results in asphyxiation?[3]

d)             Is it an accident when someone is playing basketball, turns their neck, which causes trauma to the artery, resulting in a stroke?[4]

Perhaps to everyone's surprise, the courts have concluded that all of the above situations are in fact accidents.

The courts used to draw a distinction between policies which insured against incidents that happened by accidental means versus those that insured against an accidental result.  This distinction was recently criticized and abolished by The Supreme Court of Canada in Martin v. American International Life Assurance Company, [2003] 1 S.C.R. 158 (S.C.C.).  In deciding whether the scenario in paragraph (a) above was an accident, the court concluded that the pivotal question was whether the insured expected to die.  The new approach is to examine the situation from the stand point of the insured, and if that is not possible, to look from the perspective of a reasonable person.  Thus, if a plaintiff can prove that the method by which the injury arose or the result that happened were neither expected nor intended from their own perspective, then based on the Supreme Court's decision, the matter will be found to be an accident. It is important to note that this is an expansion of the common law definition of an accident, and likely does not apply in cases where the policy itself actually defines an accident.

The courts have long held that the word accident does not have special legal meaning and should be given its ordinary meaning.  The Supreme Court of Canada adopted a definition dating back to 1903 where a different Court stated that the word "accident" is used in the popular and ordinary sense of the word which is an unlooked for mishap or an untoward event which is neither expected or designed.  But then how can it be said that normally occurring ailments in the body, such as a pre-existing disc protrusion such as in example (c) above or a drug addiction which is solely within the control of an insured, which then leads to adverse results can be said to be accidental?

Perhaps the moral of the story or the lesson to be learned is that in the case of the word ÒaccidentÓ, the Courts have in fact turned it into a term of art which carries a specialized meaning in the law.  To avoid being bound by the definition of accident which has been developed in the Courts over the years, insurers may be better off defining the term ÒaccidentÓ in the policy.  As well, express definitions of what will not be regarded as an accident could be included.  For example, the definition of an accident could include the express provision that if the means by which the incident occurs or the result of an incident are caused or contributed to in any way by a pre-existing health condition, whether diagnosed or treated, then that will not be regarded as an accident.

It appears that the whole purpose of accident insurance is being overlooked (that it is there to cover situations that are not foreseen and are in fact accidental).  There are other types of insurance, such as disability insurance, for which benefits are available in the event that there are health conditions that lead to disability.

Perhaps it is time for insurers to take a stand and ensure that the risk that they are insuring against is the one in fact that has been bargained for.  If that happens, and the Courts interpret that in the manner in which it is intended to come across, then at least that will not have been an accident.

 

 

Prepared by Rogers Partners LLP

Barristers & Solicitors

181 University Avenue, Suite 1900

Toronto, ON   M5H 3M7