The Supreme Court of Canada has concluded that CPP disability benefits are not “a policy of insurance” for purposes of deductibility in family protection endorsements.
In automobile insurance, there are a number of forms of payments and benefits that injured victims may receive as a result of their injuries. In some cases, those payments or benefits may be deductible at law from the amount of money that the injured Plaintiff may otherwise have been able to claim from the at-fault Defendant in the tort action (i.e. the driver or owner of the at-fault vehicle). There have been a number of judicial decisions that have considered Canada Pension Plan (“CPP”) disability benefits in the context of this issue of deductibility. Most recently, on January 27, 2017, the Supreme Court of Canada released its Judgment in Sabean v. Portage La Prairie Mutual, which further defined the role of CPP disability benefits in tort claims.
At issue in the case was whether CPP disability benefits are considered to be “a policy of insurance providing disability benefits” as prescribed in the Nova Scotia SEF 44 Endorsement. This endorsement offered excess insurance coverage to its own insureds, in cases where their injuries resulted from a motor vehicle accident caused by an uninsured or inadequately insured motorist. Similar endorsements are found in automobile insurance policies across Canada. The Ontario-equivalent is the OPCF-44R Family Protection Endorsement, which provides at section 7(6):
The amount payable under this endorsement to an eligible claimant is excess to an amount received by the eligible claimant from any source, other than money payable on death under a policy of insurance, and is excess to amounts that were available to the eligible claimant from…a law or policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits.
The Supreme Court of Canada definitively concluded:
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.
Although the specific endorsement at issue in the case belonged to Nova Scotia, given that the Ontario OPCF-44R includes the same language, this is a cross-country win for injured Plaintiffs.