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Should This Homeowners’ Insurance Policy Indemnify a Bully’s Parents?

fly happy family on blue sky

fly happy family on blue sky

Should This Homeowners’ Insurance Policy Indemnify a Bully’s Parents?

Bullying between kids is a hot topic lately. Public dialogue usually focuses on prevention; however it can (and should) also touch upon the related issues of whether parents should be accountable for their kids’ behaviour, and whether they should be vicariously liable from a legal standpoint.

A recent Ontario case takes this inquiry one step farther – by delving into the question of whether an insurer under a homeowners’ policy should be required to defend parents who are later sued for the harm arising from the bullying child’s conduct.

The facts were these: A grade 8 girl, together with two of her classmates, had bullied, threatened and physically assaulted a fellow student, causing her physical and psychological harm. The parents of the bully were sued in civil court for negligently failing to control their daughter, and for failing to investigate and prevent the bullying she had perpetrated.

The bully’s parents held a homeowners’ insurance policy that provided coverage in cases where their personal acts caused unintentional injury or property damage. Relying on that policy, the parents asked the insurer to defend them in the civil action they were facing, and to indemnify them against any successful claims.

The insurer refused, relying mainly on two exclusion clauses in the policy, including one that excluded coverage if the parents “[failed] to take steps to prevent sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment” by “any other person at [their] direction”.

The resulting dispute between the insurer and the bully’s parents was brought before an application judge, who held that the coverage exclusion predicated on the parents’ “failure to take steps” did not specify whether that failure needed to be intentional. Since there was a legal principle that exclusion clauses were to be interpreted narrowly, and since the ambiguity was to inure to the benefit of the parents in the role of the insured, the court found the insurer could not rely on the exclusion in this case. Rather, it was obliged to defend and indemnify the bully’s parents.

On subsequent appeal, the insurer prevailed: It was found exempt from having to defend the parents in court and from indemnifying them in the event that any of the underlying legal claims arising from their daughter’s bullying conduct were successful.

The Appeal Court reasoned that from a legal standpoint, both the exclusion clause in the policy and the various Statements of Claim in the civil actions faced by the parents used the same sort of language that referred to negligence: it referred to a “failure” by the parents to do certain things or take certain steps to prevent harm. The legal claims against the bully’s parents were clearly-worded, and fell squarely within the category of claims for which the insurer had created clear exemptions in the policy.
This meant that the parents – if eventually found to have been negligent – will remain personally on the hook for damages arising from their daughter’s bullying. They were also ordered to pay the insurer’s appeal costs amounting to $15,000.

For the full text of the decision, see:

D.E. v. Unifund Assurance Co. [2015] ONCA 423

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