Earlier this year, in Continental Casualty Company v Chubb Insurance Company of CanadaThe Ontario Court of Appeal (“ONCA”) decided a priority dispute between two insurers regarding liability for Statutory Accident Benefits (SAIB) coverage, where a policy provided for a mandatory basic AMA and a other policy a Basic, Mandatory and Optional Enhanced AAM. cover.
Key points to remember
The Ontario Court of Appeal ultimately determined that an optional benefit insurer cannot require a priority insurer to compensate it for the mandatory basic SABS coverage provided to the claimant and to have to administer mandatory and optional benefits. In other words, AIAL payment obligations cannot be shared between insurers and Art. 268 of the Insurance Law may be waived by Ontario Policy Amendment Form 47 (“OPCF 47”).
The decision is also a signal to business owners, who have access to and control of their company vehicles, but who do not use any of these vehicles, that they will not meet the “use regular” and cannot be considered “deemed named insureds” for the purposes of SABS coverage.
In this case, the plaintiff was an owner, president and CEO of a forest products company who suffered catastrophic injuries when he was struck by a motor vehicle while jogging near his cottage. He had basic mandatory SABS coverage under his personal automobile insurance policy through Chubb Insurance Company of Canada. In addition, his company purchased optional upgraded SABS surplus under a fleet policy through Continental Casualty Company for company vehicles.1
After the accident, Continental denied a) that its policy offered enhanced optional SABS coverage and b) that the plaintiff had coverage under its policy. As such, he claimed the basic mandatory SABS from his personal auto insurance, Chubb.
Chubb then initiated a priority dispute, claiming that Continental was the insurer responsible for paying the SABS.2
Note, art. 268 of the Insurance Law includes priority of payment rules. Specifically, if a SABS Claimant is a Named Insured on more than one policy, the Claimant can choose to choose which insurer they will claim the SABS from.3
A “named insured” generally refers to the person who is actually named in an insurance contract, while an insured is a person who, by law or contract, has all or part of the rights of the named insured. According to AIAL Schedulea person will be deemed to be the named insured under an automobile insurance policy at the time of an accident where the insured automobile is “made available to the individual regular use by a company.”4
In April 2018, an arbitrator found that the plaintiff was the named insured under the Chubb policy and a “deemed named insured” under the Continental policy because he met the “regular use” requirement. . The rationale was that the claimant had regular access to company vehicles, even though he had never driven them.
In summary, the arbitrator therefore determined that the plaintiff had the right to choose which insurer to seek SABS coverage from and, therefore, had the right to seek optional coverage and basic mandatory AAB from Continental.5
Continental has appealed to the Ontario Superior Court of Justice (“ONSC”).
Judge Stinson determined the arbitrator’s finding that the plaintiff met the “lawful use” requirements under the
AIAL Schedule as “deemed named insured” was unreasonable. Despite being the owner and having access and control over the vehicles, he never used these vehicles.6
Therefore, the Claimant could not elect to claim benefits from the Continental policy, and Chubb was determined to be the first insurer pursuant to s. 268 of the Insurance Act. The arbitrator’s order was overturned and Judge Stinson said that in light of OPCF 47, which allows an insured to claim both mandatory accident benefits and optional accident benefits under of any policy which provides enhanced optional benefits and prevents the insurer offering the enhanced optional benefits from denying benefits on the basis that s. 268 of the Insurance Lawprovides that another insurer is liable to pay the amount of mandatory accident benefits, Continental must pay both the basic mandatory SABS and the optional SABS to the claimant. They were also responsible for the cost of any optional benefits provided.
Notwithstanding this, however, Judge Stinson ruled that Continental was entitled to reimbursement by Chubb of the cost of the basic mandatory AAB benefits paid to the plaintiff by Continental and of all expenses associated with the administration of those benefits.seven
Conclusion at the Court of Appeal for Ontario
Chubb then appealed to the Ontario Court of Appeal, raising two issues:
- If the ONSC erred in concluding that the claimant did not meet the regular use requirement and was not a deemed insured under the Continental policy; and
- Whether the ONSC erred in concluding that Chubb was obligated to indemnify Continental for the basic mandatory AAB payments that Continental was obligated to pay the plaintiff under OPCF 47.
On the first issue, Justice Simmons, writing for a unanimous panel that included Justice MacPherson and Justice Nordheimer, agreed with Justice Stinson’s finding that the plaintiff did not meet the “regular use” requirement under to the
Notably, in the view of the Ontario Court of Appeal, the issue was not whether a company vehicle was available to the plaintiff at the time of the accident, but “whether a company vehicle company was at his disposal for his regular use at the time of the accident.”8 The Ontario Court of Appeal failed to understand how availability for
usual the use of company vehicles could be charged in the absence of any use until the moment of the accident.9
On the second issue, the Ontario Court of Appeal disagreed with Justice Stinson’s conclusion, noting that OPCF 47 clearly requires the optional SABS insurer to pay both compulsory basic and optional enhanced AIAL benefits.
The Ontario Court of Appeal held that liability for SABS cannot be shared under s. 268(2) of
insurance law, and that the OPCF 47 can squeeze out any s. 268
Insurance Law priority rules.
Accordingly, the appeal was allowed in part and Judge Stinson’s order requiring Chubb to reimburse Continental for the cost of the basic mandatory SABS and related benefits was set aside.ten
1. Continental Casualty Company v Chubb Insurance Company of Canada, 2022 ONCA 188 in paragraphs 1-4.
Same in paragraph 5.
Same in para 6.
Same in para 7.
Same in para 12.
Same, in paragraph 14.
Same in paragraph 17.
Same in paragraph 59.
Same at para 61.
Same at para 110.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.