No person shall be entitled to indemnity or payment under this policy who is an occupant of any automobile which is being used without the consent of the owner thereof.
Prohibited Use by Insured
- (1) The insured shall not drive or operate the automobile,
(a) unless he is for the time being either authorized by law or qualified to drive or operate the automobile; or
(b) while he is prohibited under order of any court from driving or operating an automobile; or
(c) while he is under the age of sixteen years or under such other age as is prescribed by the law of the province in which he resides at the time this contract is made as being the minimum age at which a license or permit to drive an automobile may be issued to him; or
(d) for any illicit or prohibited trade or transportation; or
(e) in any race or speed test.
Prohibited Use by Others
(2) The insured shall not permit, suffer, allow or connive at the use of the automobile,
(a) by any person,
(i) unless that person is for the time being either authorized by law or qualified to drive or operate the automobile; or
(ii) while that person is under the age of sixteen years or under such other age as is prescribed by the law of the province in which he resides at the time this contract is made as being the minimum age at which a license or permit to drive an automobile may be issued to him; or
(b) by any person who is member of the household of the insured while that person is prohibited under order of any court from driving or operating an automobile; or
(c) for any illicit or prohibited trade or transportation; or
(d) in any race or speed test.
The last 2 clauses are drawn verbatim from s. 230 of the Insurance Act, supra.
That being said, although not contained in the standard policy, it is worth noting that, as a matter of public policy, s. 2 of the Insurance Act, supra, states that:
- Unless the contract otherwise provides, a violation of any criminal or other law in force in the Province or elsewhere does not, ipso facto, render unenforceable a claim for indemnity under a contract of insurance except where the violation is committed by the insured, or by another person with the consent of the insured, with intent to bring about loss or damage; but in the case of a contract of life insurance this section applies only to disability insurance undertaken as part of the contract.
Thus, the field of exclusions is potentially broader than what is expressly contained in the insurance contract. However, as far as car insurance is concerned, s. 250(4)(c) of the Insurance Act, supra, adds:
250 (4) The right of a person who is entitled under subsection (1) to have insurance money applied upon his judgment or claim is not prejudiced by,
(c) any contravention of the Criminal Code, chapter C-34 of the Revised Statutes of Canada, 1970, or a statute of any province or territory of Canada or of any state or the District of Columbia of the United States of America by the owner or driver of the automobile,
and nothing mentioned in paragraph (a), (b) or (c) is available to the insurer as a defence in an action brought under subsection (1).
The New Brunswick Court of Appeal, in MacDonald v. Prudential Assurance Co. Ltd (1971), 24 DLR (3d) 185 p 194, held unanimously that the latter provision “intended to deprive insurers of the benefit of the principle of public policy defined in s. 2”. Of course, that is limited to third parties, not the insured himself or herself. However, the insurance policy must first be applicable (i.e. car driven with the consent of the owner): Co-Operators General Insurance Co. v. Lanteigne (1999), 211 NBR (2d) 102 paras 13-17 (QB), confirmed at (1999), 215 NBR (2d) 394 (CA). See Morrison v. Co-Operators General Insurance Co., 2004 NBCA 62, where a similar issue was addressed from the perspective of the insurer’s duty to defend. See also J.B. v. Co-Operators General Insurance Co. (1999), 222 NBR (2d) 203 (QB); O’Donnell v. Halifax Insurance Co., 2001 NBCA 109; and Donovan v. Optimum Insurance Co. Inc., 2009 NBCA 6.
It is thus safe to say that the standard policy has exclusions specific to Section B or Section C and others that are general (contractual or legislative). There is a fair amount of duplication between the various provisions. It is worth mentioning that, at any given time, the burden rests on insurers to show that the conditions of an exclusion are met: Cooperative Fire and Casualty Co. v. Beaulieu (1977), 16 NBR (2d) 623 paras 23-25 (QB); McClure v. Co-Operative Fire and Casualty Co. (1986), 75 NBR (2d) 205 para 20 (QB).
One of the rules of interpretation of insurance policies is that coverage provisions are construed broadly, while the exclusions are interpreted narrowly: Berardinelli v. Ontario Housing Corp.,  1 SCR 275 p 280; Ryan v. Victoria (City),  1 SCR 201 para 38; Graham v. Hill, 2003 NBCA 24 para 12; Axa Insurance Co. v. Rolfe, 2004 NBCA 14 para 25; Burke Estate v. Royal and Sun Alliance Insurance Co. of Canada, 2011 NBCA 98 para 45; Holohan v. Dunfield (1982), 133 DLR (3d) 267 para 25 (QB); Morrison, supra para 40 (see “Deductibility of Section B Weekly Indemnity Benefits”). Thus, these various clauses will generally receive an interpretation that favors insureds.