Canada Pension Plan (“CPP ”) disability benefits are not considered part of a “policy of insurance” says the Supreme Court of Canada ( click here for Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7) as CPP is a mandatory government program. This is an important decision for injury claimants in Nova Scotia. However, this decision will have limited impact in British Columbia because the ICBC claim system is no fault and deducts CPP payments from UMP and ICBC Part 7 accident benefits(after 104 weeks) anyway. Therefore ICBC claimants should expect virtually no change to their benefits because of this decision.
The injury claimant was injured in a motor vehicle accident in Nova Scotia and was awarded damages of $465,400 by a jury. The tortfeasor’s insurer paid the claimant approximately $382,000, leaving a shortfall of more than $83,000. He claimed that amount from his own insurer under the provisions of his SEF 44 Endorsement. The insurer sought to deduct future CPP disability benefits under his SEF 44 Endorsement. The trial judge found that CPP benefits were not benefits from a “policy of insurance” under the Endorsement and thus would not be deducted from the amount payable. The Nova Scotia Court of Appeal disagreed, concluding that the CPP was a “policy of insurance” under the Endorsement.
The Supreme Court of Canada (SCC) held that future CPP disability benefits are not disability benefits from a “policy of insurance” within the meaning of the provision and are not deductible from the amounts payable by an insurer. The overarching purpose of the Endorsement is to provide the “excess” coverage that arises where an underinsured motorist cannot pay the full amount of a court judgment. The Endorsement indemnifies insureds for any shortfall in the payment of a judgment for damages against an underinsured tortfeasor, subject to specified deductions. With respect to amounts that the eligible claimant is “entitled to recover”, the statute identified nine sources that give rise to deductions from the amount payable by the insurer, none of which include the CPP .
In British Columbia CPP is deducted from disability beyond 104 weeks as is stated in section 86(2) of Insurance (Vehcile) Regulations:
Where benefits are payable under the Canada Pension Plan or the Quebec Pension Plan to an insured during the period and in respect of a disability for which benefits are payable to the insured under this section, the amount payable each month under this section shall be reduced by an amount not exceeding the amount of the first regular monthly benefit cheque received by the insured under the Canada Pension Plan or the Quebec Pension Plan after the insured becomes eligible for benefits under this section, and that amount shall continue to be deducted notwithstanding that the amount payable to the insured under the Canada Pension Plan or the Quebec Pension Plan may be increased during the time the insured remains eligible for benefits under this section, but if the amount payable to the insured under the Canada Pension Plan or the Quebec Pension Plan decreases, the benefits payable under this section shall be increased accordingly.
CPP is also deductible from any Underinsured Motorist Protection (“UMP”) amounts in BC. Deductible amounts include amounts already paid by ICBC, WCB, EI, under a certificate, policy or plan of insurance providing third party legal liability indemnity to the underinsured motorist and the Canada Pension Plan, CPP.
CPP benefits are not however deductible in the lawsuit against the driver at fault for the car accident. The effect of the CPP deduction from Total Temporary Disability Benefits, TTD, is that it there is a smaller deduction of accident benefits from the tort judgment. The SCC decision may allow claimants to obtain TTD without deduction and CPP in the 104 after a car accident. However it is rare that a claimant will obtain CPP in the first two years, given the nature of the benefits.
Posted by Vancouver Personal Injury Lawyer Mr. Renn A. Holness, B.A. LL.B– Member of the British Columbia and Nova Scotia Bar.