Superior Court orders priority among insurance policies in accident case to reflect appeal ruling

In a motor vehicle accident case, the Ontario Superior Court explained that the priority of payment was as follows: the defendants’ automobile policy, the OPCF 44R Family Protection Coverage endorsements, then the personal umbrella liability policy (PULP). 

On Nov. 30, 2021, the defendant P. McNorgan failed to stop at a red light on Riverside Drive in London, Ontario. She drove through the intersection, went up the curb, and hit multiple members of the London 120th Brownies. The impact killed one child and injured several others. The defendant G. McNorgan owned the vehicle. 

The motor vehicle accident led to eight companion actions with direct or derivative claims involving 25 plaintiffs. Family members brought the derivative claims under s. 61 of Ontario’s Family Law Act, 1990. 

The insurer defendants issued various automobile insurance policies insuring the plaintiffs. These policies took the form of the standard Ontario automobile policy (OAP 1) and included OPCF 44R endorsements, which provided standard underinsured automobile coverage. 

In favour of the McNorgan defendants, Desjardins Insurance issued an OAP 1-form policy and a PULP, an excess liability policy that included a standard excess policy form (SPF 7) providing excess third-party liability coverage beyond the automobile insurance limit. 

Superior Court’s 2025 ruling

On Aug. 26, 2025, in Hugo v. McNorgan, 2025 ONSC 4739, the Superior Court ruled that the PULP was not a motor vehicle liability policy under s. 1 of Ontario’s Insurance Act, 1990, or s. 4 of the OPCF 44R endorsement. 

The court confirmed a $300,000 limit for the motor vehicle liability insurance of the McNorgans, whom the court deemed inadequately insured motorists under s. 1.5 of the OPCF 44R. The court concluded that the total amount the plaintiffs could divide proportionally was the aggregate limit of $2.3 million. 

Shortly after the release of this decision, the Ontario Court of Appeal published its ruling in Rodriguez-Vergara v. Lamoureux, 2025 ONCA 620. 

With permission, the parties provided further submissions on Rodriguez-Vergara’s impact on the issues of the priority of payment between the OPCF 44R insurers and the umbrella policy, as well as the subrogation rights of the OPCF insurers. 

Priority of payment

Last Feb. 3, in Hugo v. McNorgan, 2026 ONSC 4739, Justice Evelyn ten Cate of the Ontario Superior Court of Justice vacated paragraphs 39 to 41 of her earlier decision. In her supplemental reasons, she ordered that: 

• The McNorgans’ automobile policy was primary, followed by the respective OPCF 44R endorsements until the exhaustion of these endorsements or until the satisfaction of the plaintiffs’ damages in any particular action, whichever was less, followed by the PULP to its limits to respond to the claims’ portions exceeding the pro rata share of the automobile policy and the OPCF 44R entitlement 
• No subrogation right existed against Desjardins 
• Subrogation rights directly against the McNorgans were limited to the amount by which payment by the OPCF 44R exceeded the combined automobile policy and excess policy limits 

In addressing the priority of payment, the court explained that the SPF 7 endorsement sought to convert the PLUP, which was otherwise a general personal umbrella policy, into one that could respond to automobile-related liability upon the exhaustion of the primary automobile liability limits. 

The court added that the SPF 7 endorsement provided additional third-party liability beyond the limits of the insured’s primary automobile policy and any listed underlying excess layers. The court noted that the excess insurer’s duty to indemnify would arise only after the actual payment of a covered loss exhausted the lower layers. 

Next, the court determined that the Rodriguez-Vergara priority scheme governed. Applying the priority scheme to the facts in this case, the court ruled that: 

• All plaintiffs shared pro rata in the motor vehicle liability policy’s underlying limits of $300,000 
• With one exception, the plaintiffs each had recourse to their own policy of $1 million each, totalling $5.2 million (the underlying limit of $300,000, plus seven OPCF 44R endorsements of $700,000 each) 
• The PULP limit of $2 million supplemented the total in the previous item, amounting to $7.2 million in insurance limits 

The court held that the Rodriguez-Vergara interpretation aligned with numerous public policy objectives. First, the court noted that the plaintiffs received consumer protection under the OPCF 44R, which was part of the motor vehicle liability policy. 

The court explained that the OPCF 44R was an optional automobile insurance endorsement aimed at protecting the insured and their family if an uninsured, underinsured, or unidentified at-fault driver injured or killed them. 

Second, the court pointed out that the McNorgans – who purchased optional, extended coverage as a safeguard against third-party claims – also received consumer protection. 

Third, the court determined that the Rodriguez-Vergara interpretation aligned with the decisions in Keelty v. Bernique, 2002 CanLII 22040 (ONCA), Heuvelman v. White, 2004 CanLII 34619 (ONCA), McKenzie v. Dominion of Canada, 2007 ONCA 480, Benson v. Walt, 2018 ONCA 172, and Smith v. Taylor, 2024 ONCA 223. 

Fourth, the court said the interpretation conserved scarce judicial and non-judicial resources because the policy limits available to each plaintiff increased, thus decreasing the risk of a shortfall between each claim’s value and the available limits, making settlements more likely prior to trial. 

Lastly, as Rodriguez-Vergara bound it, the court concluded that subrogation by the OPCF 44R defendants was unavailable against Desjardins and was only directly available against the McNorgans, where payment by the OPCF 44R would exceed the combined automobile policy and excess policy limits.