In Bawden v. Wawanesa Mutual Insurance Company, 2013 ONCA 717 (C.A.), eight year old Kelly Bawden was struck and injured by a motor vehicle driven by Joyce Wilson and owned by Randal Wilson in August 2003.
Kelly’s mother, Elizabeth Bawden, sued the Wilsons in her capacity as litigation guardian seeking damages on Kelly’s behalf. The Wilsons brought a third party claim against Elizabeth Bawden and Kelly’s father, David Bawden, claiming contribution and indemnity for failing to properly instruct and supervise their daughter.
The Bawdens held a homeowners’ insurance policy issued by Wawanesa Mutual Insurance Company. Wawanesa declined to defend them on the third party claim. The Bawdens brought an application for coverage. The application judge found in favour of the Bawdens. Wawanesa appealed to the Ontario Court of Appeal.
The critical coverage provision in the policy stated:
You are insured for claims made or actions brought against you for:
- personal Liability: bodily injury or property damage arising out of your personal activities anywhere in the world. [Emphasis added]
Exclusions: you are not insured for claims made or actions brought against you for…
- bodily injury to you or to any person residing in your household other than a residence employee. [Emphasis added]
Wawanesa argued that the exclusion clause removed all claims for bodily injury by the insured and those residing in their household. The Court of Appeal disagreed and the appeal was dismissed.
The Court held that the coverage provision must be interpreted broadly and therefore clearly encompasses the third party claim which arises out of the insureds’ personal activities in negligently failing to supervise their daughter.
Further, the Court held that the exclusion clause must be read narrowly. It cannot encompass the third party claim which is not a claim on behalf of Kelly for her injury, but a claim by the Wilsons against the Bawdens for contribution and indemnity.
Lastly, the Court considered the policy objectives of the exclusion clause. The exclusion clause removes from coverage those claims that raise a risk of collusion between family members. This risk is not present in this case in which the Wilsons have brought a third party claim against the insureds.