Insurer to pay $1.5 million after Quebec Superior Court deems suicide exclusion to be null and void

The decision, widely expected to be appealed, serves notices to insurers to clearly indicate exclusions or clauses, particularly clauses dealing with suicide, that reduce coverage under an appropriate heading or risk having the exclusion clause declared null and void, according to insurance law expert Jacqueline Bissonnette.

“It’s a ruling that changes the state of law on this issue as it is the first judgment that has annulled a suicide clause,” noted Bissonnette, a Montreal lawyer with Poudrier Bradet Avocats and Chair of the executive of the insurance and civil litigation section of the Canadian Bar Association, Quebec branch. “What’s new is that the ruling stipulates that the suicide clause should be included in the same way as the other exclusions. That’s what’s new, and that if it’s not included, the policy will be cancelled and the exclusion will be considered to be unwritten.”

In Quebec, insurance exclusion clauses are governed by article 2404 of the Civil Code of Quebec which sets out that insured must be able to easily identify exclusion or reduction of coverage clauses by an appropriate heading clearing indicated in the text of the policy. But the Civil Code also has a provision aimed at protecting insurers against policyholders tempted to take out an insurance only to commit suicide shortly thereafter. Under article 2441, insurers can refuse payment if the suicide occurs within two years of signing the contract but only if it was expressly stipulated that coverage would be excluded in such a case.

These two articles were at the heart of a case dealing with a Quebec businessman who committed suicide in February 2018, 16 months after signing a new life insurance contract. The beneficiaries of the businessman’s insurance policy sued SSQ Assurance because the insurer reimbursed them only the premiums paid for the insurance coverage, without interest, as provided for in the “Suicide” clause of the insurance contract. The beneficiaries alleged that the suicide exclusion clause contained in the “General provisions” portion of the insurance contract should be invalid, null and void and unenforceable against the insured because the clause was not expressly stipulated in the insurance policy as an exclusion clause under an appropriate heading. The insurer acknowledged that the disputed clause was an exclusion clause but countered that it was legally drafted in easily understandable terms and clearly indicated under an appropriate title.

In a 21-page ruling, Quebec Superior Court Justice Jean-Yves Lalonde underlined that the scope of Article 2404 is as important for insureds as the scope of Article 2441 is for insurers. The legislator, in order to enable insureds to take out insurance in “full knowledge of the facts,” wanted to provide them with a “tool for easy identification” of exclusion or reduction of cover clauses, said Justice Lalonde. That “tool,” under Article 2404, consists of an appropriate heading clearly indicated in the text of the policy, outlining all exclusions or reduction of coverage clauses, added Justice Lalonde.

“The Court sees it as a cardinal principle that the specific and express exclusion relating to the suicide of the insured must be found under an appropriate heading clearly indicating the exclusions and reductions in coverage by grouping them together,” held Justice Lalonde in Bolduc c. SSQ Assurance, 2023 QCCS 266. “Despite the fact that it affects SSQ’s interests in a singular way, this decision is an invitation to the seemingly impenetrable world of insurers to open their eyes to this legislative requirement of public order designed to protect the interests of the insured.”

Moreover, the legislator in Article 2441 refers to an “express exclusion of coverage,” pointed out Justice Lalonde. That makes Article 2441 subject to the application of Article 2404, which in this case means that the “Suicide” exclusion clause should have been listed under an appropriate heading grouping together all exclusions of coverage to alert the insured that it was a coverage exclusion clause, held Justice Lalonde. While in this case the text of the “Suicide” clause was clear and unambiguous, the insurer failed to meet its obligation to first identify any exclusion of coverage by a clear expression and then omitted to group the clauses restricting or excluding coverage under an appropriate heading, found Justice Lalonde.

But that does not often take place, said Bissonnette. Suicide exclusion clauses are “generally” not found under an appropriate heading that group all exclusions of coverage because “it attracts attention,” said Bissonnette. “An insurance policy is a document that is not accessible to everyone, that is not easy to read and is often complicated,” remarked Bissonnette. The ruling, added Bissonnette, underscores the importance of indicating that there are exclusions or restrictive clauses on the first page of the insurance policy, with a heading that is clearly visible and ideally in bold. “After that, it’s up to the insured to look at the policy’s exclusions so that they become aware of the limitations of the policy,” said Bissonnette.

Counsel for the plaintiffs and the insurer declined to comment.