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Insurers Need to Be Careful to Define Key Words in Policies

Doug Jagoe v Lloyd’s Underwriters, 2021 NBQB 220.

Reading Time: 2 Minutes

Author: Weston McArthur (Student-at-law)

In August of 2020, near Clifton, New Brunswick, Doug Jagoe (the Plaintiff) organized an off-road motorsport event called a Mud Bog. He secured insurance from Lloyd’s Underwriters (the Defendant) for the event.

Unfortunately, during the event, a truck lost control and hit a spectator. The spectator sued the Plaintiff, who in turn requested that the Defendant defend him in the action pursuant to his insurance policy.

The Defendant denied the Plaintiff’s claim, citing breach of a warranty provision within the policy which stated that “all spectator viewing areas will be a minimum of 20 feet from the mud bog track and behind suitable barriers or fencing” [para 6].

At the time the spectator was hit, “the injured spectator was: (1) beyond the racing track; (2) more than 36 feet from the track; (3) behind a rope line that extended 75 feet past the finish line” [para 9].

The Plaintiff sued the Defendant, seeking a declaration that it was be required to defend him against the injured spectator’s lawsuit.

The Court ruled against the Defendant, stating that the warranty was too vague and therefore could not be used against the Plaintiff. In this case, the key words “suitable” and “barrier” were not defined in the policy; because of this ambiguity, the Court stated that “there is no accepted evidence that would support a breach to the extent of voiding the policy.

Link: https://www.canlii.org/en/nb/nbqb/doc/2021/2021canlii108879/2021canlii108879.html?searchUrlHash=AAAAAQAJaW5zdXJhbmNlAAAAAAE&resultIndex=5

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