Auto Insurance in Nova Scotia: Looking Into the Insurance Contract

Auto insurance is mandatory for Nova Scotians. Each driver in Nova Scotia contracts with an insurer so that they may be insured against liability and for damages should they ever be involved in a car accident. While the contract is between the driver and the insurance company, because car insurance is the primary source of compensation for car accident victims, governments are heavily involved in the regulation and operation of the insurance regime. Automobile insurance is a product with a public purpose. As such, it is arguable that car insurance contracts are no “contracts” in the traditional sense. They can be considered public regulatory documents.

The importance of this distinction arises during disputes over insurance coverage and denials. When such disputes come up, Courts are inevitably asked to decide on the meaning of the insurance policy. In doing so, should they treat the policy as a “contract”, freely negotiated between two parties? Or, should Court regard the policy as a “social document”, akin to a piece of legislation? The answer is important as it establishes whether a narrow text-centric interpretation will be used (i.e. what is the precise wording of the document), or whether the Courts will determine coverage dispute based on public policy (i.e. what is the intent and purpose of the policy).

Wagners law firm prefers and argues for the latter. Injured victims of car accidents routinely face insurance denials from insurance companies. In deciding whether the denials are warranted, Wagners contends we must look beyond a narrow reading of the plain contract. Being more akin to a public document, we must look at the social consequences of a denial of coverage. There is an inherent power imbalance between insurance companies and injured car accident victims, consumer protection principles call for the language of the insurance policies to be construed as much as possible in favour of the injured car accident victim.

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