Part II — Underinsured Motorist Coverage (OPCF 44R)

Introduction

Uninsured motorist coverage is statutory. Underinsured motorist coverage (UIM) is contractual. And that distinction is not academic. It plays out in mediation rooms, with real stakes.

I’ve now mediated cases where the underinsured motorist carrier was at the table from the opening bell, fully engaged in the valuation of the claim, and others where their absence hung over the negotiation like an unspoken barrier. Everyone knew the policy limits were in play, but no one with the chequebook was there to deal with it. UIM cases are rarely modest. They are high-exposure, policy-limits litigation, and when the plaintiff’s own insurer becomes the effective defendant, the negotiation becomes layered, adversarial, and unforgiving. UIM cases are strategically complex and procedurally exacting. Understanding how this kind of coverage works is an essential tool in the kit of every plaintiff and defence counsel involved in high-stakes cases.

In Ontario, there is no statutory right to underinsured motorist protection. Instead, it exists only if the insured purchased the OPCF 44R Family Protection Endorsement, which extends the third-party liability limits of the injured person’s own policy when the at-fault driver’s coverage is too low to satisfy the loss. It is not automatic, it is not compassionate, and it is not discretionary. It is a contract, interpreted by courts using ordinary principles of insurance interpretation, and enforced strictly according to its wording.

This second part of my Proving the Negative series examines how OPCF 44R functions, what entitlement requires, how Ontario courts have interpreted its UIM conditions and limits, and how mediations change the moment a 44R insurer enters the room.

The Contract: What OPCF 44R Actually Says

The OPCF 44R^[1] is an FSRA^[2]-approved Ontario Policy Change Form (endorsement) issued under the Insurance Act’s s. 227^[3] approval-of-forms regime. Its substantive rights and duties are contractual, set out in the endorsement text itself.

It states, at Clause 3:

…the insurer shall indemnify an eligible claimant for the amount that he or she is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury to or death of an insured person arising directly or indirectly from the use or operation of an automobile.

Clause 1.5 defines an “inadequately insured motorist” as the owner or driver of an automobile whose total liability insurance is less than the insured’s Family Protection Coverage limits under the policy.

Clause 7 makes the Family Protection endorsement strictly excess coverage. No amount is payable until the limits of the inadequately insured motorist and any jointly liable parties have been fully paid, released, or paid into court. Only then does the OPCF 44R respond.

Clause 14 confirms that the insurer may contest both liability and damages unless those issues were determined in a proceeding where the insurer had a reasonable opportunity to participate. That means a default judgment against the tortfeasor does not automatically bind the UIM carrier.

This is the heart of 44R. You do not get a cheque just because the defendant has low limits. You must first prove liability, exhaust the tort limits, and establish damages, and only then can you pursue your own insurer for the shortfall.

Interpreting OPCF 44R — The Ontario Decisions

Ontario courts have consistently held that OPCF 44R is not a general guarantee of fairness. It is a carefully drafted contractual undertaking that applies only when its precise terms are satisfied.

Endorsement must be read with the policy — not in a vacuum

In Pilot Insurance Company v. Sutherland, 2007 ONCA 492^[4], the Court of Appeal dealt with an Ontario family who had purchased the OPCF 44R and then suffered a catastrophic loss in a Jamaica crash caused by underinsured motorists.

The motion judge found 44R coverage applied because the endorsement itself contained no territorial limit, but the Court of Appeal reversed, holding that s. 22 of the endorsement expressly carries forward the policy’s territorial clause (“Except as otherwise provided… all … terms … of the Policy shall have full force and effect”). So the standard OAP 1 limit to Canada, the U.S., SABS-designated jurisdictions, and vessels between them governed and barred recovery for a Jamaican accident. The Court found that there was no conflict with the Insurance Act because the Act is silent on underinsured coverage while s. 243(1)/(1.1) addresses only uninsured/unidentified coverage. Underinsured is optional, contractual coverage and not a subset of s. 265.

The Court emphasized that an endorsement is a “change form,” not a stand-alone policy. It can modify the contract, but absent contrary wording, the underlying policy term, including territorial limits, apply, and principles of contra proferentem^[5] do not arise where the combined wording is clear.

Limitation period starts when the 44R insurer refuses indemnity — not at the accident

In Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88, the Court of Appeal addressed exactly when the two-year limitation clock begins for an OPCF 44R claim. Mr. Schmitz was injured in 2006, sued the tortfeasor for damages exceeding $1 million, and then sued his own insurer (Lombard) under the 44R for any shortfall above the tort limits. Lombard argued the 12-month contractual limit in clause 17 of the 44R applied and, in any event, that time ran from when the plaintiffs knew their damages would exceed the tort limits.

The Court held that the Limitations Act, 2002^[6] governs (s. 4 and s. 5), not the endorsement’s shorter contractual period, and applying Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218^[7], that a 44R claim is “discovered” only when the insurer fails to satisfy a demand for indemnity. Practically, that means the limitation period starts the day after the insured makes a demand under the endorsement (the Court amended the order to make that timing explicit). The Court rejected the notion that insureds must await a trial result to demand indemnity and noted that the insurer’s procedural protections, including the opportunity to participate so as to be bound, are preserved by clause 14.

44R applies only if the claimant is an “insured person” and the policy’s conditions are met

In Kahlon v. ACE INA Insurance, 2019 ONCA 774, the plaintiff was catastrophically injured while working in Florida with a tractor-trailer. He tried to access 44R under both the fleet policy (ACE) and his personal auto policy (Allstate).

The Court of Appeal held there was no 44R coverage. ACE’s fleet endorsement expressly limited 44R to passenger/light commercial vehicles and excluded vehicles over 4,500 kg GVWR^[8], which captured the tractor-trailer. Allstate’s personal policy imported its “Other Automobiles” special conditions (including the >4,500 kg exclusion) into the 44R via s. 22 of the endorsement, so the same weight/class restriction defeated coverage there too.

The Court emphasized that 44R is optional, tethered to the policy, and subject to policy definitions/limits. Courts won’t use “reasonable expectations” to rewrite clear exclusions. The appeal was allowed (no 44R from Allstate) and the cross-appeal dismissed (no 44R from ACE).

The 44R insurer may still dispute liability and damages unless properly bound

In Tuffnail v. Meekes, 2020 ONCA 340^[9], State Farm (the 44R carrier) didn’t sit back and write a cheque. It defended the 44R claim and, via subrogation under OPCF 44R s.20 and Insurance Act s.278, issued a third-party claim against the wedding bartender to put his negligence in play. A jury ultimately apportioned fault among the driver (65%), host (20.03%), bartender (11.12%), and plaintiff (3.85%), leaving a shortfall beyond the tort limits.

The Court of Appeal confirmed two hard rules. The first was plaintiff priority—State Farm’s subrogation recoveries must be shared pro rata until the plaintiff is fully indemnified under the judgment, not just to the 44R limit. Secondly, there is no automatic preclusion. A 44R insurer can contest liability and damages unless it participated in, or expressly consented to be bound by, earlier litigation findings.

The Court also held that because State Farm’s subrogated pleading alleged the bartender’s negligence to the plaintiff, he was “jointly liable” with the inadequately insured motorist for OPCF 44R s.7 purposes, making the bartender’s policy limits “available” and deductible from the 44R exposure. The net result was that unless the 44R insurer is properly bound (by participation or agreement), it retains a live right to litigate fault and quantum while still honouring the plaintiff’s first call on full compensation through pro-rated sharing of subrogation proceeds.

Mediation When the 44R Insurer is Involved

In underinsured cases, mediation changes dramatically the moment the tort limits are clearly in play. I keep seeing the same four issues in these files, and they’re almost always high-stakes.

Attendance and Authority of the 44R Insurer

If the plaintiff has formally advanced the claim and put the 44R carrier on notice, I take the view that they should be at the table with authority. There’s no court order that forces them to attend, but under Rule 24.1 and their duty of good faith, they shouldn’t be sitting on the sidelines. When they don’t show or send someone without meaningful authority, mediations stall, get adjourned, or waste everyone’s time.

The Consent-to-Settle Trap

The consent clause in the OPCF 44R is a landmine. If the plaintiff settles with the tortfeasor for policy limits and signs a full release without getting the 44R insurer’s written consent, the underinsured claim can be wiped out entirely. I have seen good claims put at risk because someone treated that clause as boilerplate. It isn’t. It is a condition of coverage.

The 44R Insurer Is Not an Ally

Once the tort limit is tendered, the plaintiff’s own insurer becomes the true opponent in the room. They dispute liability, contributory negligence, causation, quantum, threshold They challenge everything. They are no longer aligned with the plaintiff simply because they issued the policy. Their contractual exposure begins where the tortfeasor’s ends.

Structuring the Mediation Properly

To make the process work, the tort insurer has to tender its limits first, and the release signed at that stage must preserve the 44R claim. The 44R insurer needs to be notified early and invited. From there, negotiations split into two tracks — first, what the tort insurer will pay. Second, what, if anything, the 44R insurer owes. The release must also preserve subrogation and set-off rights under section 267.8 of the Insurance Act.

Conclusion — The Legal and Practical Reality

The OPCF 44R endorsement is not a goodwill promise. It is a precisely structured contractual fallback that compensates only when liability is proven, tort limits are exhausted, entitlement is established, and the insurer has been given the chance to contest liability and damages. It does not rescue the unprepared. It rewards precise pleadings, early notice, thoughtful settlement strategy, and absolute compliance with the text of the endorsement.