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Auto insurance as a social contract
Why the contractual model for interpreting auto insurance doesn’t work
Automobile insurance in Can-
ada is a product with a decidedly
public purpose. It is a driver-
funded source of compensation
for motor vehicle accident vic-
tims— one of the important
foundations of Canada’s social
safety network.
Provincial governments are
heavily involved in the regula-
tion and operation of the auto-
mobile insurance regime in the
interest of the public. This
includes drafting and approving
insurance policy language, with
input from the insurance indus-
try. The public flavour of Can-
adian automobile insurance
ERIK
KNUTSEN
should be driving the way courts
determine insurance coverage
disputes in automobile accidents
involving injuries or death.
Automobile insurance polices in
Canada are not “contracts;” they
are public regulatory documents.
The majority of Canadian
courts use an ill-fitting, text-cen-
tric interpretive framework that
relies on a fiction that the auto-
mobile insurance policy is a
bilateral, private contract — a
bargain. Courts employ tools of
contractual construction to dis-
cern meaning in words as if the
insured and insurer themselves
bargained over the choice of the
language. Yet neither party can
bargain over terms of a legisla-
tively approved mandatory auto-
mobile insurance policy.
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