Bawden v. Wawanesa – Insurance Company Owed Parents Duty to Defend

An eight year old girl was injured in a motor vehicle accident. The girl”s mother, acting as the girl”s Litigation Guardian, sued the driver of the vehicle that hit her. That driver brought a third party claim against the girl”s parents for contribution and indemnity based on negligent supervision. The parents had a homeowner”s insurance policy through Wawanesa. Wawanesa refused to defend the parents. The parents brought an application seeking a defence under their homeowner”s policy.

The critical coverage provision in the Wawanesa policy is as follows:

“You are insured for claims made or actions brought against you for:

(1) Personal Liability: bodily injury or property damage arising out of your personal activities anywhere in the world.

[5] The critical exclusion provision is the following:

Exclusions: you are not insured for claims made or actions brought against you for: …

(3) bodily injury to you or to any person residing in your household other than a residence employee.”

Wawanesa”s argument is that the exclusion clause removes all claims for bodily injury by the insured and those living in their household from the general coverage for claims against the insured for bodily injury.

Madam Justice Sanderson disagreed. She held that Wawanesa did owe a duty to defend the parents. Wawanesa appealed. The Court of Appeal dismissed the appeal. The Court noted that the exclusion in the policy was for claims made for “bodily injury…to any person residing in your household”. Since this was a claim for contribution and indemnity by a tortfeasor and not a claim for bodily injury made by a person residing in the household, Wawanesa owed the parents a duty to defend the third party claim.