Case Comment – Heffernan Estate v. Lloyd's Canada

Today the Ontario Superior Court released its decision in the case of Heffernan Estate v. Lloyd's Canada and considered whether an insurer has a duty to defend when the policy is limited in its express language to indemnification.

Heffernan was involved in a boating accident while his blood alcohol level was well above the legal limit.  Heffernan was killed in the accident and his passenger sued his estate. Heffernan's insurer, Lloyd's took the position that there was no duty to indemnify Heffernan and relied on a policy exclusion which stated that the insurer would not be liable to indemnify the insured if the vessel was operated "illegally".

Justice Belobaba distinguished the within facts from those before the Court of Appeal in Kereliuk v. Jevco.  In Kereliuk, the Court of Appeal ruled that the phrase "authorized by law" (used in reference to driving an automobile) was limited in scope to having a valid driver's license and did not extend to other infractions