Supreme Court rules Future CPP Disability Benefits Are Not Deductible Under SEF 44 Endorsement
2/3/2017 11:13 AM
It is a fundamental principle in tort law that the injured person be compensated for the full amount of his or her loss. However, what happens if you are injured by another driver in a motor vehicle accident and the other driver’s insurance policy does not have enough money to cover the full extent of your injuries?
This is where Standard Endorsement Form 44 coverage, more commonly referred to as “SEF 44 coverage”, comes in handy.
What is SEF 44 coverage?
SEF 44 coverage is an excess insurance policy that you can purchase in addition to your existing automobile insurance coverage.
For example, if you are injured by another driver in a motor vehicle accident and the other driver’s insurance policy has a $750,000 limit, and you have SEF 44 coverage in the amount of $1,000,000, then your SEF 44 coverage would “top up” your compensation.
Could your future Canada Pension Plan disability benefits be deducted from the amount payable to you under SEF 44 coverage?
No. In a recent decision from the Supreme Court of Canada, Sabean v Portage La Prairie Mutual Insurance Co., 2017 SCC 7, the Court held that Canada Pension Plan (“CPP”) disability benefits do not reduce the amount payable by the insurer under SEF 44 coverage.
CPP disability benefits provide monthly payments to people who made sufficient contributions to the CPP and are not able to work regularly because of a disability.
In Sabean v Portage La Prairie Mutual Insurance Co., 2017 SCC 7, the plaintiff’s SEF 44 coverage policy stipulated that future benefits from a “policy of insurance providing disability benefits” are deducted from the amount payable by the insurer.
The defendant insurer unsuccessfully argued that the CPP is a “policy of insurance providing disability benefits”.
The Court reasoned that an average person applying for SEF 44 coverage would understand a “policy of insurance providing disability benefits” to mean an optional, private insurance contract, and not a mandatory statutory scheme such as the CPP.
The Supreme Court of Canada’s decision confirms that your future CPP disability benefits, which you may receive as a result of your injuries from the motor vehicle accident, will not be deducted from any SEF 44 coverage award you may receive.