The Benefits of Having an ‘Umbrella’ Policy in Your Insurance Coverage

By Roger Foisy on July 25th, 2012

When choosing to purchase insurance the option of an ‘umbrella’ policy should be considered. ‘Umbrella’ policies essentially provide extra protection in the event that damages are owed to you due to injuries suffered, such as in a motor vehicle accident. If the at-fault driver does not have sufficient insurance to cover your damages then your own insurer may be able to provide you with the difference created by the shortfall.

If these precautions were taken they could have made a significant impact on the results of Van Bastelaar v. Bentley, [2011] O.J. No. 4666 (C.A.), where the accident victims were unsuccessful in fully claiming their damages. Due to the Defendant at-fault driver, the victims were involved in a motor vehicle accident and suffered serious injuries. While both parties had a $1 million insurance policy limit, the issue was complicated as there were multiple injury claimants against the at-fault driver. Therefore, with the at-fault driver’s insurance policy divided amongst the four claimants there would be a potential shortfall. The accident victims were denied from recovering this shortfall from their own insurance company where they had an existing underinsured coverage as per the OPCF 44R Family Protection Endorsement (in lay terms they had the same 1 million coverage as the at-fault driver).

The Court clarified that an insurance company’s obligation to pay does not arise until the total amount of insurance held by the at-fault driver at the moment of the accident is less than the family protection endorsement liability limit. As both parties had $1 million in coverage, the accident victims were not able to recover the damages shortfall. How could have an ‘umbrella’ policy benefitted the Plaintiffs (accident victims)? With an ‘umbrella’ policy the Plaintiffs would have had extra coverage to protect them in this scenario. If the at-fault driver was unable to fully pay for damages caused to the accident victims then their own insurance company would have stepped in to fill this gap and provide them with the necessary coverage. This way if you sustain a serious injury in a motor vehicle accident due to an underinsured at-fault driver then you could have access to the damages shortfall which might include wage loss, medical, rehabilitation or other out of pocket expenses.

For a further explanation of ‘umbrella’ policies please click here.

Roger Foisy