The Ontario Court of Appeal (“ONCA”) recently decided on a priority dispute between insurers concerning liability for statutory accident benefits (“SABS”). The priority dispute involved one policy which provided basic mandatory SABS coverage and another policy which provided both basic mandatory and optional enhanced SABS coverage.
The following are the two main takeaways from this case:
- A company owner and CEO with access to and control over company vehicles who has never used any of the company vehicles will not meet the “regular use” requirements and cannot therefore be considered a “deemed named insured”.
- An optional benefits insurer must administer both mandatory and optional benefits coverage and cannot pursue the priority insurer for basic mandatory SABS provided to the claimant.
In 2015, the claimant, who was the owner, President, and CEO of a forestry products company, suffered catastrophic injuries when he was struck by a vehicle while jogging.
The claimant had basic mandatory SABS coverage under his personal automobile insurance policy which was issued by Chubb Insurance Company of Canada (“Chubb”). Additionally, the claimant’s company had purchased optional enhanced SABS coverage for the company vehicles issued by Continental Casualty Company (“Continental”).
After the accident, Continental denied that a) its policy provided optional enhanced SABS coverage to the claimant and b) that the claimant had coverage under its policy. The claimant subsequently claimed basic mandatory SABS from Chubb. Subsequently, Chubb initiated a priority dispute, claiming that Continental was liable to pay SABS to the claimant.
In 2018, Arbitrator Bialkowski determined that the claimant was the named insured under the Chubb policy. The arbitrator also found that the claimant was a “deemed named insured” under the Continental policy as he met the “regular use” requirements in s. 3(7)(f)of SABS because he had regular access to the company vehicles, even if he had never driven any of them. The arbitrator concluded that Continental was the priority insurer and had to pay the claimant both basic mandatory and optional enhanced SABS. Continental appealed to the Ontario Superior Court.
On appeal to the Superior Court, Justice Stinson found that the arbitrator’s conclusion that the claimant met the “regular use” requirements was unreasonable as the claimant had never used any of the company vehicles despite having access to and control over the vehicles. As such, the claimant could not elect to claim benefits from Continental under s. 268 of the Insurance Act and that Chubb was the priority insurer under those rules. Despite this, however, Justice Stinson found that Continental was responsible to pay both basic mandatory SABS and optional enhanced SABS to the claimant pursuant to the terms of OPCF 47. He further found that Chubb must reimburse Continental for the cost of basic mandatory SABS benefits paid to the claimant by Continental.
Chubb appealed the decision to the Court of Appeal for Ontario. Justice Simmons, writing for a unanimous panel which included Justices MacPherson and Nordheimer, agreed with Justice Stinson that the claimant does not meet the “regular use” requirements in s. 3(7)(f) of SABS. The ONCA made it clear that the issue to consider is not whether a company vehicle was available to the claimant at the time of the accident. Rather, it is “whether a company vehicle was being made available for his regular use at the time of the accident”. The ONCA also failed to see how “regular use” could be imputed in the absence of any use of the company vehicles by the claimant prior to the accident.
The ONCA however disagreed with the Superior Court justice that Chubb must reimburse Continental for the basic mandatory SABS benefits paid to the claimant by Continental. In support of its decision, the ONCA noted that the OPCF47 endorsement which accompanies optional benefits, is clear in requiring the optional enhanced SABS insurer to pay both basic and mandatory optional enhances SABS. Further, the OPCF 47 displaces s.268 priority rules. Also, the priority scheme in Ontario makes an insurer liable to pay SABS benefits generally, rather than simply basic mandatory SABS alone. Therefore, the ONCA concluded that the liability for SABS cannot be bifurcated under s 268(2) of the Insurance Act. The ONCA held that “provided that the claimant satisfies the four conditions present in the endorsement, the optional benefits insurer is required to administer both mandatory and optional benefits coverages without regard for the priority of payment rules in Section 268 of the Insurance Act”.
Navid Ghahraei is a member of the Loss Transfer and Priority practice group at the firm and the author of this blog. If you have a question about this decision, or a similar file, please contact Navid at 647-427-3362.