A daughter fell off the balcony of her parents’ home while visiting the family farm. In a recent decision, the Court of Appeal for Ontario held that at the time of the accident, the daughter was not an “insured” under a farm insurance policy issued to the parents by the Lanark Mutual Insurance Company. Lanark therefore had a duty to provide the parents with a defence to the negligence action that the daughter had brought against them.
The policy contained a standard clause in which the term “insured” was defined so as to include a relative while “living in the named insured’s household”. Although a farm insurance policy will typically include liability coverage, these policies do not respond to a liability claim brought by one insured against another.
The judge who heard the duty to defend application found that some eight years before the accident, the daughter was driven from the family home at the age of 15 due to conflicts with her mother, serious religious and lifestyle differences with both parents, and the daughter’s disclosure that her father had been sexually abusing her for some five years. Since she left home, she had lived what the court described as a “peripatetic existence”. At the time of the accident, she was visiting the parental home in order to see her brother, who had returned to Canada from overseas, and she had been staying there for two and half weeks before she was injured.
The Court of Appeal stated that the purpose of the policy exclusion was to protect the insurer from collusive claims brought by individuals living together in a close relationship. The appellate court agreed with the application judge that the term “household” describes a group of people living together in a family-like relationship which includes an element of intimacy or community.
The evidence supported the application judge’s conclusion that the parents did not enjoy that kind of relationship with their daughter, and that she was not “living in the named insured’s household” at the time of the accident. She had not lived at home since she was either evicted by her parents or chose to leave home following her father’s sexual abuse conviction many years prior to the injury. Her relationship with her parents had broken down completely when she first left home, she had established her own itinerant lifestyle, and she was not living in her parents’ household at the time of the accident.
It is interesting that the Court Of Appeal based its decision on the purpose of the exclusion clause, identified by the Court as the need to protect the insurance company against collusive claims brought by one family member against another. Logic and fairness dictate that where the danger of collusion is nonexistent due to the breakdown of the family relationship, the need for the protection afforded to the insurer by the exclusion clause is no longer present.
Link: Tannahill v. Lanark Mutual Insurance Company, 2011 ONCA 123
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