Supreme Court Of Canada – CPP Disability Benefits Do Not Reduce Underinsured Motorist Coverage

Future Canada Pension Plan ("CPP") disability benefits do not reduce the amount an insurer must pay out under a standard form contract providing underinsured motorist coverage ruled recently the Supreme Court of Canada. In reaching its decision, the court made clear that when interpreting a standard insurance policy, the words used must be given their ordinary meaning as understood by the average person applying for insurance.

In May 2013, Andrew Sabean was injured in a motor vehicle accident. As a result of a lawsuit brought against the other driver's, a jury awarded him damages of $465,400, which exceeded the latter's liability insurance, leaving a shortfall of $83,000.  Sabean turned to his own insurer and claimed the amount of $83,000 under Nova Scotia SEF 44 Endorsement, a standard form contract. Because the Endorsement provides that amounts recoverable under "any policy of insurance providing disability benefits" are to be deducted from any shortfall, the