On May 9, 2024, in Beneva inc. v. Bolduc, 2024 QCCA 589, the Quebec Court of Appeal unanimously confirmed the decision rendered by the Honourable Jean-Yves Lalonde of the Superior Court in Bolduc v. SSQ Assurance, 2023 QCCS 266, which was the subject of one of our previous newsletters.
Facts in dispute
François Roch (“Roch“) was insured under a life insurance policy issued by SSQ Assurance (“SSQ“) (“Policy“).
The “General Conditions” section of the policy contained a provision excluding coverage in the event of suicide within two years of the policy coming into force:
SUICIDE
“If, during the two (2) years following the effective date of a benefit, the insured dies by his own hand or act, whether sane or insane, the Company’s obligation is limited to the payment of a death benefit equivalent to the refund of premiums paid for this benefit, without interest.” [Rough translation]
Approximately 16 months after the effective date of the policy, Roch committed suicide. The issue before the court was whether the exclusion provision was valid and enforceable against the beneficiaries.
Superior Court decision
Based on articles 2404 and 2441 of the Civil Code of Quebec (C.C.Q), the Superior Court ruled that the exclusion clause was null and void. According to Justice Lalonde, all exclusions and reductions of coverage must be grouped under a single appropriate heading, so that the person reading the policy does not have to read the entire policy to locate them. The suicide exclusion provision, which was found in the “General Conditions” section of the policy and which did not even include the word “exclusion”, did not meet this criterion.
Court of Appeal decision
The Court of Appeal found that the trial judge had not erred in concluding that the suicide exclusion clause was not properly titled and was therefore null and void and unenforceable against the beneficiaries of the Policy.
The Court recalls that articles 2404 and 2441 C.C.Q. must be read in conjunction with each other:
2441 C.C.Q. The insurer may not refuse to pay the sums insured by reason of the suicide of the insured, unless it has stipulated an express exclusion of coverage for this case. Even then, the stipulation is without effect if the suicide occurs after two years of uninterrupted insurance.
Any amendment to the contract which increases the amount of insurance is, with respect to the additional amount, subject to the exclusion clause originally stipulated for a period of two uninterrupted years of insurance starting from the effective date of the increase.
2404 C.C.Q. In matters of personal insurance, the insurer may only invoke exclusions or coverage reduction clauses that are clearly indicated under an appropriate heading.
These provisions were adopted as part of the reform of the Civil Code of Quebec to give greater protection to the insured, in a context where the balance of power between the insured and the insurer is necessarily unbalanced. Any clause derogating from these obligations of absolute public order is sanctioned by nullity.
The specific objective of article 2404 C.C.Q. is to encourage insurers to clearly indicate to the insured any reductions or limitations in coverage. In this respect, the examination of compliance focuses solely on the title, rather than on the intelligibility of the provision itself. In other words, the provision remains null and void if the title is inappropriate, irrespective of the clarity of the text.
The Court of Appeal also recalls that, in accordance with its teachings in Lemay v. Assurance-vie Desjardins, 1998 CanLII 352 (QC CA), repeated in Godin v. Compagnie d’assurance du Canada sur la vie, 2006 QCCA 851, an appropriate title must draw the reader’s attention to the result or consequences of the clause, i.e., the exclusion or reduction as such, and not the cause of the exclusion, i.e., the insured’s suicide. Consequently, the title “suicide” does not meet the objective of highlighting the total exclusion of coverage in the event of suicide occurring within two years of the policy coming into force.
However, article 2404 C.C.Q. does not require that all of the exclusion provisions of a single policy be grouped together in the same section. A contract of life and health insurance may include different types of coverage, each of which may be subject to specific or general exclusions. However, all exclusions or reduction provisions relating to the same type of coverage must be grouped together under a single appropriate heading. In fact, the Court encourages insurers to use similar headings for each type of coverage, to facilitate identification.
Takeaway
- In life and health insurance, all exclusion or reduction provisions relating to the same type of coverage must be grouped under the same appropriate heading.
- A title is appropriate if it refers to the consequences of the clause and not to its cause. For example, the title “Exclusions and Reductions of Coverage,” which indicates the effect of the clause, would likely be appropriate, whereas the title “Suicide,” which refers to the cause of the exclusion, would not.
- In a single policy with several types of coverage, it is preferable that the exclusion titles be similar to meet the objectives of the law, i.e., to protect the insured by making it easier to identify the exclusion provisions in the contract.