A life insurance policy with an ambiguous rider for plane crashes has been interpreted in favour of the beneficiary widow. The June decision from the British Columbia Court of Appeal found, among other reasons, that the insurer could easily have drafted a clear rider but failed to do so: the policy must therefore be interpreted in favour of the insured.
The decision in McLean v. Canadian Premier Life Insurance Company Inc. overturns the trial decision from the B.C. Supreme Court that found in favour of the insurer. The appeal court found that the trial judge had misinterpreted a rider on a life policy that restricted the types of flights covered by the accidental death benefit.
The case dealt with a plane crash in northern B.C. in August 2008. The beneficiary’s husband was killed, along with everyone else on the flight, when an amphibious aircraft chartered by the beneficiary’s employer, crashed. The plane was carrying the employees of Seaspan International Ltd. under an arrangement with Pacific Coastal Airlines Ltd. The policy was sold through Sears Canada with monthly premiums of $14.05. While the basic accidental death benefit was only $25,000, the rider provided a $1 million death benefit if the insured was killed while travelling in a plane that was a “common carrier.”
While Pacific was regularly chartered by Seaspan to transport its employees, it also ran a business providing regular scheduled service to paying passengers. The issue before the court focused on the definition of “common carrier” in the policy; the key element of that definition was a “public conveyance” that: “…provided and operated on a regular passenger route with a definite regular schedule of departures and arrivals between established and recognized points of departure and arrival….”
In holding for the widow, the court found that the definition of common carrier was unclear as to whether the plane had to be on a regularly scheduled flight at the time of the accident. The court partly relied on the legal principle which requires ambiguities in an insurance contract to be resolved in favour of the insured. “I agree with the [beneficiary] that the [insurer] could have easily remedied these deficiencies with clear language if it intended to exclude coverage for charter flights. It must bear the consequences of its failure to do so…” the decision of Justice Neilson states.