Gibbens decision means accident insurance will stay affordable

By Alain Thériault | February 26 2010 05:43PM

After having unprotected sex with three women, Charles Gibbens contracted genital herpes, which resulted in a rare condition that completely paralyzed his lower body. When the Co-operators Life denied the $200,000 claim he made under his group accident insurance plan, he took the matter all the way to the Supreme Court.

Mr. Gibbens' argument relied in part on Martin v. American International Assurance Life, a unanimous Supreme Court of Canada decision from 2003, which held that the accidental nature of an event may depend on the consequences that the insured had or did not have in mind.

Since paraplegia was an unexpected consequence of engaging in unprotected sex, Mr. Gibbens' counsel argued that he should be entitled to the accident insurance. He also relied on Kolbuc vs. ACE INA, in which the Ontario Court of Appeal found in favour of an insured who had become paralyzed after contracting the West Nile virus, as the disability was an unexpected outcome of a mosquito bite.

As reported in the September 2009 issue of The Insurance and Investment Journal, insurers were concerned that if the Supreme Court went against them, they could end up having to pay out millions of dollars in claims to people who had died after unknowingly exposing themselves to the flu or other bacteria. There was also speculation that a finding in favour of Mr. Gibbens would force companies out of the accident insurance market altogether.

On Dec. 18, however, The Supreme Court ruled against Mr. Gibbens. The court found that he had contracted a sexually transmitted disease in the ordinary way, and not by an "external, violent and accidental means" within the meaning of the insurance policy.

"Accident insurance is not comprehensive health insurance," noted Justice Ian Binnie in his decision. "It cannot be correct that passengers sitting in an airliner who catch the SARS virus through the externality of the plane's air circulation system, or riders on a bus who catch swine flu from an infected fellow passenger, or people who contract any number of infectious diseases because of a failure to wash hands in disinfectant, or to smack a circling mosquito, have valid claims under an accident policy."

Jodi Skeates, legal counsel at the Canadian Life and Health Insurance Association, says that the Court's ruling maintains the status quo for the life and health insurance industry and provides some important clarity that was needed after the Martin case. "As a result, Canadians will continue to have access to affordable accidental death and dismemberment insurance coverage," she comments. "Had the ruling gone the other way, it could have been a new era for life and health insurers."