Two spouses, each with their own separate motor vehicle policy with different insurers.  A courtesy vehicle offered while one spouse’s vehicle was in the shop, insured with a third provider, and driven by the other spouse.  A minor dependant passenger.  Add in a  tragic accident, and this is the perfect formula for a complex priority dispute.  This was the situation in Aviva v. Economical and Unifund, May 24, 2016, in which Arbitrator Bialkowski confirmed that even the most difficult priority scenario can be entangled with the right amount of delicacy. 

The majority of the facts were agreed to in advance by the parties.  Barry and Hilary were a married couple who each owned vehicles that were insured under different policies of insurance with different auto insurers.  Barry’s vehicle was insured with Economical’s subsidiary Perth Insurance Company, while Hilary was insured with Unifund. 

On July 3, 2014 Hilary’s vehicle was taken in for repairs.  A courtesy vehicle was provided, which was owned by a third party and insured by Aviva. No documents of any kind were signed at the time that the courtesy vehicle was provided.  Later that day Barry was involved in a serious motor vehicle accident while driving the courtesy vehicle. The couple’s 14 year old son was a passenger in the vehicle at the time. Tragically, Barry was killed and the couple’s son sustained serious injuries. 

Applications for Accident Benefits were subsequently submitted on behalf of Barry’s estate and on behalf of the couple’s minor son to Aviva.  They were received by Aviva on August 8, 2014 and a Notice to Applicant of Dispute Between Insurers was sent to both Unifund and Perth on August 18, 2014.  On October 15, 2014 Perth confirmed that it would accept priority from Aviva with regards to the claim of the Estate of Barry, and indemnified Aviva for same.  Perth then sent a Notice to Applicant of Dispute Between Insurers to Unifund with respect to the same claim on November 14, 2014. 

Private arbitration was initiated by Aviva regarding the claim of the son, and by Perth regarding the claim of the Estate of Barry. The priority disputes regarding both claims were heard together.

Ultimately, Arbitrator Bialkowski held that both claimants had the option to elect between Unifund or Perth as the responsible insurer via a careful untangling of the facts using the hierarchy established by Section 268 of the Insurance Act

As both claimants were occupants of the courtesy vehicle, they were insureds under the Aviva policy at the time of the accident. Unifund’s priority in the dispute was established by Section 2.2 of the OAP portion of its policy, which extended coverage to other automobiles not described on the policy, including a temporary substitute automobile like the courtesy vehicle.  As the courtesy vehicle was a temporary substitute for Hilary’s motor vehicle, and it was being driven by her spouse at the time of the accident, the vehicle was insured under Unifund’s policy at the time of the accident.  Under the same OAP provisions, the courtesy vehicle was also insured by Perth, resulting in a three-way tie with Aviva respecting priority pursuant to section 268(2)(1)(i) of the Insurance Act

The tie-breaker was found in section 268(5) through (5.2).  Section 268(5) eliminated Aviva, as it required a named insured or spouse/dependent of same to claim under such policy.  Section 268(5.1) subsequently then permitted the claimants to elect between the two remaining insurers.  As claims had only been made to Aviva, the opportunity to elect was preserved and was not abrogated by Perth’s previous admission of priority.  So, where the only election ever made was to bring the application forward to Aviva, and Aviva is at a rung below Perth and Unifund, Arbitrator Bialkowski ordered that the claimants be given a new election as between Unifund and Perth, and that the insurers be guided by that election.

Overall, similar to his previous decisions in this area, Arbitrator Bialkowski’s decision in Aviva v. Economical and Unifund has helped to unravel the factual web of insurers and insureds that arise in priority disputes, especially those complicated scenarios that involve courtesy vehicles.  When faced with a claim involving a courtesy vehicle, Aviva v. Economical and Unifund signals that insurers must keep in mind that priority may not always appear as it seems at first glance.