Finally, a legal decision related to accident claims and motor vehicle insurance coverage in Nova Scotia has gone against the big insurance companies and in favour of claimants injured. In Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, the Supreme Court of Canada has finally put to rest an argument continually raised by insurers to reduce their exposure - that CPP Disability benefits must be deducted when calculating an insured’s entitlement under an SEF 44 underinsured motorist coverage policy endorsement.
SEF 44 insurance is additional insurance you can and should purchase as part of your auto insurance coverage. This additional coverage can protect you if you or family members are injured by an underinsured motorist. In Nova Scotia, the majority of drivers only have the minimum $500,000 limit of coverage so if you sustain any kind of severe and disabling injury, it is unlikely $500,000 would cover your future wage loss or future care costs etc. SEF 44 coverage enables you to claim the shortfall in the payment of your judgment (or settlement) against a defendant driver from your own insurer.
However, there are several deductions set out in the SEF 44 policy wording which the insurer can use to reduce your entitlement, including future benefits from a “policy of insurance providing disability benefits”. The insurers have argued that CPP Disability benefits are a form of disability insurance and should be deducted in calculating what, if any, amount is payable by the SEF 44 insurer.
For anyone permanently disabled, especially for younger claimants, the future CPP Disability benefits they will receive (payable to age 65) can be substantial. The deduction of those benefits in calculating a claimant’s entitlement under an SEF 44 policy would significantly reduce or sometimes even eliminate any claim under the SEF 44 policy. This was the hope of these insurers.
However, the Supreme Court of Canada in Sabean disagreed and held that the CPP Disability Program is not a “policy of Insurance” and CPP Disability benefits are therefore not deductable when calculating entitlement under the SEF 44 endorsement provisions. It held that the average person would interpret “policy of insurance” as an optional, private insurance contract and would not include a mandatory statutory scheme such as the CPP Program.
It is important to note that this ruling only applies to claims under the SEF 44 endorsement provision. Insurers are still arguing that in a legal action for damages, the defendant (at fault) driver gets to deduct any past or future CPP Disability benefits received by the victim so as to reduce the past and future wage loss claims. The defendant insurers argue that Section 113A of the Insurance Act permits them to deduct both past and future CPP Disability benefits when calculating past and future wage loss, because that section provides that damage “…shall be reduced by all payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction...” The issue is whether CPP Disability benefits are paid for income loss or loss of earning capacity. The insurers also argue that, notwithstanding the words “before the trial of the action” which clearly limit the applicability of Section 113A and Section 113BA to past loss of income or loss of earning capacity calculated up to the time of trial, the future CPP Disability is also deductable simply because a Regulation defines “net loss of earning capacity” as including “future income loss”. The insurers will also argue that even if you are not receiving CPP Disability, if such benefits were available then that value gets deducted from any wage loss claim.
This issue is presently being determined by the Nova Scotia Court of Appeal, who will hopefully conclude that the present wording of the legislation only applies to calculation of past income loss or past loss of earning capacity. Stay tuned.