In Travelers v. CAA, the Ontario Court of Appeal applied the principle outlined by the Supreme Court of Canada almost 20 years ago, that Ontario’s insurance laws do not have extraterritorial effect.
The claimant was ordinarily resident in Ontario where she owned a vehicle insured by CAA Insurance. She was temporary employed as a nurse by the Nunavut Government. While driving a government vehicle, insured by Travelers Insurance, she was catastrophically injured in an accident in Nunavut.
The claimant elected Ontario Accident Benefits through her automobile policy with CAA. CAA paid statutory accident benefits and commenced a priority arbitration proceedings where it argued that Travelers was the priority insurer. The case turned on whether Travelers is an Ontario Insurer and subject to the Ontario insurance laws, including priority and accident benefits legislation.
Arbitrator’s Decision – Upheld on Appeal to the Superior Court
The Arbitrator held that Travelers is an Ontario Insurer because it is licensed in Ontario and bound by the Power of Attorney and Undertaking filed with the Ontario Superintendent of Insurance. As such, it is bound by the provisions of the Insurance Act, the corresponding Statutory Accident Benefits Schedule, and the Ontario priority legislation.
The Arbitrator held that Travelers was in priority because the claimant was the occupant of the vehicle Traveler’s insured, and section 268 (5.2) of the Insurance Act makes Travelers the priority insurer. Traveler’s were required to reimburse CAA for benefits paid and for all future benefits.
The decision was upheld on appeal to the Superior Court. Traveler’s appealed to the Ontario Court of Appeal.
ONCA Reversed the Arbitrator’s Decision
Justice Lauwers, writing for a unanimous Court of Appeal panel which also included Justices Paciocco and Fairburn, concluded that the Arbitrator erred and the decision below “would effectively turn Unifund on its head”. Justice Lauwers reiterated the principle in Unifund Assurance Company of Canada v. Insurance Corporation of British Columbia, 2003 SCC 40, that Ontario’s insurance laws do not have extraterritorial effect.
Justice Lauwers reasoned that Travelers is not automatically an Ontario Insurer because it is licensed to write insurance and have an office location in Ontario.
It is also not automatically subject to Ontario insurance legislation because Travelers signed the Power of Attorney and Undertakings. The PAU operates to protect insureds, not insurers, and it does not extend priority or loss transfer obligations between insurers for accident benefits payable under the Ontario Insurance Act provisions. In other words, the Ontario insurance legislation does not extend extra-territorially to a vehicle insured in Nunavut and operated in Nunavut. The Ontario legislation and the SCC Unifund decision clearly show that an automobile insurance policy cannot be governed by both Ontario and Nunavut laws at the same time. The Arbitrator’s findings to the contrary effectively gives Ontario insurance legislation extraterritorial effect. Justice Lauwers held that the Arbitrator and appeal Judge incorrectly treated Travelers as an Ontario insurer and the Nunavut policy as an Ontario policy. This is contrary to the SCC holding in Unifund because it would constitute an extraterritorial application of Ontario law.
Justice Lauwers concluded that the Arbitrator should have found that there is extraterritorial effect of the Ontario’s insurance laws, Travelers was not the priority insurer and that the claimant’s decision to seek Ontario statutory accident benefits from CAA was final and binding on CAA.