October 24, 2006

By Brian Babcock

While Canada’s Supreme Court did not actually say that a boat was a car in a recent decision, they did decide that the limits on damages under the Canada Shipping Act did not apply to injuries suffered when a doctor was injured by a bungee cord which struck his eye while he and a friend were securing a boat on his friend’s trailer.

The logic applied by the Court is simple, in spite of the absurd title of this web tip: Once the boat was being secured on the trailer, it was no different than any other kind of cargo carried or towed by a motor vehicle, and therefore, the interest in regulating navigation underlying the Canada Shipping Act did not apply. Cargo related accidents have long been subject to provincial regulation, in Ontario under the Highway Traffic Act and the auto insurance part of the Insurance Act.

The issue was important in the particular case because the Canada Shipping Act limits the amount of damages, and the injured doctor suffered substantial income loss as a result of the injury. Although not at issue in the appeal, the effect of this ruling should also extend automobile insurance coverage to similar accidents. This is significant because boat insurance does not include no-fault accident benefits, which can provide immediate payment of income loss, medical and rehabilitation expenses and other out of pocket costs. In some cases, there may now be two policies, an automobile policy and a boat policy, which might both be available to pay an increased amount of damages, if the claim is larger than the third party liability limits of one policy.

This decision illustrates the ongoing trend we have previously observed where the Courts tend to favour results that extend compensation, and also which extend the availability of insurance coverage to fund that compensation. Injured persons should not rely on the opinions of friends, insurance agents or brokers, or adjusters employed by insurers. Legal advice is essential to preserve rights in this constantly evolving area. In addition, at fault defendants faced with claims for which coverage is denied, or where the judgment might exceed the limits of one policy, should investigate the availability of creative arguments to secure coverage, and to protect their personal assets.

Insurance coverage issues are complex and often creativity can achieve extraordinary results. Legal advice from experienced professionals is crucial to knowing your rights.