Of course, as already stated, the first issue to address when a case involves a S.E.F. 44 is whether it exceeds the limit of liability insurance already available to the tortfeasor. That will set the maximal exposure of the family endorsement insurer, if anything at all.

Once the potential exposure is established, in Lapalme v. Economical Mutual Insurance Co., 2010 NBCA 87 paras 31-34, the unanimous Court of Appeal explained the methodology to be applied to calculate the share payable by a S.E.F. 44 insurer.

[31]  Clause 4 (“Amount Payable Per Eligible Claimant”) speaks to a matter not explicitly and specifically addressed in Clause 2: the quantification of the indemnity provided under the NBEF 44, a process that requires an assessment of damages followed by a deduction of the aggregate of amounts from collateral sources in accordance with Clause 4’s specifications. […] [32]  Clause 4(a) establishes a two-step formula for the ascertainment of the amount payable under the NBEF 44.

[33]  The first step is the determination of the amount of damages the eligible claimant is legally entitled to recover from the inadequately insured motorist. Over the course of the last two decades, the Legislature of this Province has enacted a number of provisions designed to reduce the recovery that an injured party would have otherwise achieved at common law. […] Needless to say, those legislative alterations of the common law have increased the odds that an eligible claimant’s damages will not exceed the limits of insurance available under the at-fault motorist’s insurance policy. The resulting enhanced infrequency of payouts under the NBEF 44 likely goes a long way toward providing an explanation for the relatively modest premiums the endorsement has commanded to date. My point is simply this: the cost of NBEF 44 coverage ought not to produce insurer-friendly resolutions of ambiguities in the deductions-related provisions of Clause 4.

[34]  The second step under Clause 4 involves the deduction of the aggregate of “amounts” from the quantum of damages the eligible claimant is entitled to recover against the inadequately insured motorist. Like standard exclusionary clauses, the deductions-related provisions of Clause 4 are designed to reduce coverage and, as such, ought, as well, to attract a narrow construction. At any rate, any true ambiguity in their wording must be resolved in favour of the insured, not the insurer […].

[Underlined in original]

The formula established in Lapalme, supra, was broken down further in the case of Burke Estate v. Royal and SunAlliance Insurance Co. of Canada, 2020 NBQB 74 para 129. Generalizing the court’s view, the following equation is obtained in the case of an uninsured motorist:

Step 1

A     Calculate the value of the claim under each head of damages (i.e. loss of income/diminished earning capacity, valuable services, costs of future care, etc.);

B     Calculate pre-judgment interest from the date the notice was given to the S.E.F. 44 insurer in accordance with Clause 5(c);

C     Apply (if appropriate) any reduction for the plaintiff’s contributory negligence (statutory or otherwise);

D     Calculate the amount which the plaintiff is legally entitled to recover from the underinsured motorist [(A + B) – C = D];

Step 2

E     Calculate the total of all amounts recovered by the plaintiff from other listed sources (i.e. workers’ comp., Section D, etc.); and

F     Deduct the total amount of E from D to get the final amount of the claim against the S.E.F. 44 insurer [D – E = F].

Evidently, this formula is incomplete to the extent that it does not factor in the maximal exposure of the S.E.F. 44 insurer. “F” is therefore not definitive, as it will depend whether the amount falls within the limit of coverage or not. To be more precise, the formulation should indicate that “E” is deducted from the family endorsement coverage available, with the resulting amount being in fact what is left to the insured if any part of the claim remains outstanding. However, except for ignoring the applicable S.E.F. 44 policy limit, the equation is correct in cases of uninsured motorists.