A priority dispute between Wawanesa, Northbridge and Allstatearose following the death of an insured truck driver. The truck driver had a policy of insurance on his personal vehicle (Allstate) and a policy of insurance on his work truck (Northbridge). His wife also had a policy of insurance on her personal vehicle (Wawanesa). As such, the truck driver (and his wife and children) were “insured persons” under all three policies.
In this priority arbitration, Arbitrator Samworth had to address two main questions:
Are death benefits “derivative”, i.e. do they flow from the status of the insured person who dies as a result of an accident?
When an insured submits an OCF-1 to an insurer, have they exercised their discretion to choose from which insurer they wish to claim benefits?
The arbitrator answered question 1 in the affirmative. She agreed that, based on the language of the SABS, the policy that must fund a death (or funeral) benefit claim is the policy that insures the person who dies (in this case, the truck driver). As noted above, the truck driver was insured under all three policies and, normally, would be able to choose from which insurer to claim benefits.
However, section 268 (5) of the Insurance Act provides that, when an insured person is both an occupant of a vehicle and also an insured under the policy covering that vehicle, then that policy is the priority policy. Therefore, in this case, there was no choice to be made: Northbridge was the priority insurer to pay the truck driver’s death benefits claim, as it insured the vehicle in which he was an occupant at the time of the accident.
The arbitrator answered question 2 in the negative. In this case, the truck driver’s wife and children submitted claims for psychological benefits to Wawanesa and the initial claim documentation indicated that they were not aware of any other policies.
She considered the wording of section 268 (5.1) of the Insurance Act and stated that it was clear that, in order for this section to be applicable, there must be "more than one insurer against which a person may claim benefits”. She went on to confirm that, if an insured submitting an OCF-1 is not aware that they can claim against other policies, then they cannot be said to have made a “choice” between policies.
The arbitrator also noted that the right to choose is an important consumer right and an insured must have adequate information and a reasonable opportunity to make a choice. As such, she concluded that the truck driver’s wife and children were now entitled to choose from which insurer (i.e. Wawanesa, Allstate or Northbridge) to claim psychological benefits.
This case confirms that, when it comes to priority, an insured person’s choice may not always be straightforward and sometimes there is no choice at all if the insured was unaware of all of his or her choices! Therefore, if a claimant is an “insured” under more than one policy, insurers should put the other insurer on notice and investigate whether the insured person is (i) able to make a choice, and (ii) has made an informed choice.
Julianne defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, subrogated losses and general negligence claims. Read more...
Does Uber’s fleet policy with Intact provide primary accident benefits coverage to passengers who do not have their own auto insurance policies? The first arbitration decision on this issue says “yes”.
In July 2016, FSCO approved a new standard fleet auto policy to provide primary coverage for private passenger vehicles engaged in “ridesharing” activities with a “transportation network company” or TNC. Intact Insurance then issued the fleet policy to Uber and Rasier Operations B.V., which contracts with individual “rideshare drivers” who use their own automobiles for Uber.
The policy was created to address a coverage gap in the standard OAP 1 auto policy in Ontario. Section 1.8.1 of the OAP 1 excludes coverage if the vehicle is being used to carry paying passengers. This meant that every time an Uber driver was operating a vehicle and engaged in Uber activities, he or she was violating the OAP 1 and driving without full coverage.
The policy purports to fill the coverage gap in the OAP 1 by eliminating the exclusion for “carrying paid passengers” noted in Section 1.8.1. Section 2 of the Endorsement under the policy (IPCF-6TN), specifies that the policy provides “primary coverage” for the automobile while it is being used for ridesharing purposes:
Ontario’s Accident Benefits Priority Scheme
Subsection 268(2) of the Insurance Act sets out a priority scheme for determining which insurer is responsible for paying a claimant statutory accident benefits after an automobile accident:
The claimant first has recourse against the insurer of an automobile in respect of which they are “an insured” (i.e., named insured, spouse, dependant, listed driver).
If recovery is unavailable under such policy, the claimant has recourse against the insurer of the automobile that they were in or which struck them.
If recovery in unavailable under such policy, the claimant has recourse against the insurer of any other vehicle involved in the accident.
Finally, if recovery in unavailable under such policy, the claimant has recourse against the Motor Vehicle Accident Claims Fund.
Ontario’s Priority Scheme and Uber
After Intact’s “Uber policy” was released, there was never any doubt that an Uber driver injured in an accident while driving for Uber would have recourse first against Intact, under the Uber policy, pursuant to section 2 of the Endorsement. There was also no question that a passenger who happened to have their own auto policy would have recourse against that policy for their accident benefits, pursuant to section 268 (2) of the Act.
However, Intact started taking the position that its policy did not provide “primary coverage” to passengers. Intact asserted that the second paragraph in section 2 of the Endorsement specifies that “for greater clarity…” Intact would be primary over any other policy insuring the rideshare driver. According to Intact, it followed that the policy was primary only with respect to the driver’s claims and not the passenger’s claims.
Intact also argued that any Uber vehicle was insured by two insurers at the time of an accident: The underlying insurer of the vehicle and Intact. Therefore, Intact asserted that passengers, who did not have their own policies, at the very least, would have coverage under both policies.
The First Uber Decision
In Northbridge v. Intact, the claimant passenger was involved in an accident while he was using an Uber to get from Point A to Point B. He applied to Northbridge for accident benefits, seeking recourse against the (underlying) insurer of the vehicle he was in. Northbridge then pursued a priority dispute against Intact, who took the position that it was not the primary payor of the passenger’s benefits.
Arbitrator Vance Cooper sided with Northbridge, finding that the wording in the Endorsement was clear, unequivocal, and unambiguous that the policy was primary for all accident benefits claims arising from passengers who did not have their own insurance:
However, the grant of coverage set out in Section 2. of IPCF 6TN - Coverage for Ridesharing Endorsement, goes further. It clearly, unequivocally and without ambiguity specifies that Intact, as the ridesharing insurer, provides primary coverage for the automobile only while the automobile is used in the pre-acceptance period and the postacceptance period. While Section 2 provides "greater clarity" for purposes of the rideshare driver's accident benefits coverage and the priority of third party liability coverage, this does not limit the grant of coverage specified in Section 2.
I am satisfied, on a plain reading of IPCF 6TN - Coverage for Ridesharing Endorsement, that Intact provides primary coverage for statutory accident benefits in relation to the claim of Romello B., being an occupant in the rideshare vehicle during the postacceptance period and by reason of Ramella B. having no access to any other policy of insurance (apart from the Northbridge policy).
Arbitrator Cooper also disagreed with Intact that the passenger could choose as between Intact and Northbridge. He held that Intact’s argument ignored the clear and unambiguous wording in the Endorsement, since it specifies that Intact is primary.
In my "humble" opinion, Arbitrator Cooper’s decision is right on the mark. Not only does it pay homage to the clear wording in the policy; it is consistent with the primary purpose of the policy, which is to fill the coverage gap in auto insurance during Uber activities. It also protects underlying insurers from paying benefits arising from risks they never intended to cover.
We expect Intact will appeal Arbitrator Cooper’s decision. In the interim, the Northbridge decision is a huge victory for underlying insurers, especially for those who not have any appetite for Uber risks.
My office is currently involved in several other arbitration cases against Intact on the same facts. Another hearing against Intact on the same facts is scheduled for June 18, 2018 before Arbitrator Philippa Samworth.
The Uber Coverage Debate appears to be far from resolved.
Is a school bus company making a bus available for an employee driver’s regular use “at the time of the accident”, if she is not allowed to use the bus at the time of an accident?
In TD Insurance v. Dominion, the claimant worked for a school bus company, providing pick-up and drop off services before and after school. The school bus company operated during school hours, Mondays to Fridays. The company was closed on weekends.
On an unfortunate Sunday afternoon, the claimant was visiting a relative and was injured between two cars. She applied for accident benefits to TD Insurance, who was one of the insurers of a vehicle involved in the accident. TD brought a priority dispute against Trafalgar Insurance (the other insurer of a vehicle involved in the accident) and Dominion, the insurer of her school bus.
The claim against Dominion was based on the regular use provisions under the policy, which states that a person is deemed to be the named insured under a policy insuring a vehicle if, at the time of the accident, a company is making the vehicle available for her regular use.
The evidence was that the school bus driver was allowed to bring the bus home and park it on her driveway, which she did. She was allowed to use the bus for personal use between her morning and afternoon runs. But she was not allowed to use the bus at all after business hours and, particularly, on weekends when schools were closed.
At the time of the Sunday accident, the school bus was parked at her home. The evidence was that all drivers of this school bus company were not allowed to use any buses on Sundays. The wheels on the bus were not going round and round. The horn on the bus was silent. The wipers did not go swish swish swish. The people on the bus did not go up and down (because there were no people on the bus). On her driveway. Not all over town.
The arbitrator found that at the time of the accident, the school bus company was not making a bus available for the claimant’s use because, quite to the contrary, she was not allowed to use the vehicle on a Sunday. She found that the phrase “being made available” by a company required an act or active attention on the part of company to make the vehicle available.
On appeal, the Superior Court found that the arbitrator’s decision was reasonable and consistent with existing case law on regular use. The judge held:
In her decision, the Arbitrator considered the language of the statutory provision, the case law interpreting the provision, and the circumstances of Ms. Singh’s accident. Her conclusion that the school bus was not made available to Ms. Singh for regular use at the time of the accident and that, therefore, she was not a named insured pursuant to s. 3(7)(f)(i) of the SABS, was reasonable. Given the deference that must be accorded to the decision of an arbitrator interpreting her home statute in determining a priority dispute, I find no basis on which to disturb the Arbitrator’s decision.
The appeal decision is another example of how the courts are giving arbitrators deference and are becoming more reluctant to interfere with arbitration decisions. This highlights how important it is these days for insurers to win at the arbitration level.
As Ontario’s auto insurance industry was waiting anxiously, the Court of Appeal for Ontario released an interesting decision on priority dispute notices to claimants.
In Dominion v. Unifund, an accident benefits claimant was not notified of the priority dispute between the insurers until after arbitration proceedings had been commenced. The issue was whether the late notice to the claimant precluded the appellant from contesting its liability to pay SABS and from proceeding with the arbitration.
Section 3 of O. Reg. 283/85 requires an insurer wishing to dispute priority to give written notice to every insurer it claims might be higher in priority to it:
3. (1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.
Section 4. (1) of the Regulation requires the insurer giving a priority dispute notice to provide one to the claimant too, on a prescribed form:
4. (1) An insurer that gives notice under section 3 shall also give notice to the insured person using a form approved by the Superintendent.
Most of the “late notice” priority dispute cases over the years have focused on section 3 and, more specifically, whether the insurer gave written notice within the 90-day period and, if not, whether it could avail itself of the two saving provisions contained in section 3 (2).
Many insurers have been snake bitten over the years for failing to provide proper notice within 90 days. Although section 3 (2) provides two “saving provisions” that allow an insurer to overcome the late notice requirements, the tests for doing so are very difficult to meet. Of course, the consequence for failing to give proper notice in time is losing the right to dispute priority.
Conversely, there had been very little, if any cases, dealing with section 4 and whether an insurer that failed to give proper notice to the claimant would be able to pursue a priority dispute.
Dominion v. Unifund Gives Notice of New Notice Requirements
The claimant applied to Dominion for accident benefits. Dominion then gave Unifund a priority dispute notice, pursuant to section 3 of the Regulation. There was no issue that Unifund received the notice within the 90-day period.
However, some two and a half years later, Dominion sent the claimant the notice under section 4. The claimant did not object to the priority dispute and was not involved in the proceedings at all.
At arbitration, Unifund raised a preliminary issue, arguing that Dominion’s notice to Unifund was late because it had failed to give the claimant the notice within 90 days after it received the claimant’s application. In other words, Unifund argued that a notice under section 4 had the same 90-day time limit as a notice under section 3.
The arbitrator rejected Unifund’s argument and held that there was no 90-day notice period under section 4. She refused to “read in” a 90-day time limit for notice to a claimant that was not spelled out explicitly in section 4.
Unifund was successful on appeal. The appeal judge held that the arbitrator’s decision was incorrect in law. He interpreted the Regulation as requiring notice to be given to the insured within the same time period that was required for notice to the other insurer under section 3.
The Court of Appeal allowed Dominion’s appeal and restored the arbitrator’s decision. Following a recent trend, the Court of Appeal held that the appeal judge erred in law – not in his interpretation of section 4 – but in using the wrong standard of review. The Court held that a priority (or loss transfer) arbitrator is entitled to deference and that her decision was otherwise reasonable. Accordingly, the appeal judge had erred in reversing her decision and engaging in his own interpretation of the Regulation.
Stressing that the claimant’s most important right under the Regulation is to receive timely accident benefits notwithstanding a priority dispute between two insurers, the Court wrote at paragraph 44:
The arbitrator reasonably characterized the claimant’s rights as procedural. It was reasonable for the arbitrator to conclude that a 90 day time limit was not essential to protect the claimant’s rights to object and participate, which could be protected in other ways. In this case for example, the claimant’s rights were protected by ensuring that he received notice and had the opportunity to object before the arbitration hearing to determine the priorities dispute was underway.
Further at paragraph 48:
The overriding objective of the regulation is to provide a procedure to determine priority disputes. That objective would not be furthered, and may well be undermined, by importing a requirement that has nothing to do with the determination of the dispute or the rights of the parties.
Many insurers and lawyers have been holding on to matters with similar issues, waiting for the Court of Appeal’s guidance. Although the Court of Appeal restored the arbitrator’s decision because it was “reasonable”, it does appear that the Court of Appeal preferred her interpretation of section 4 over the appeal judge’s interpretation.
Going forward, and despite the Court of Appeal’s decision, insurers should always send the priority dispute notice to the claimant (section 4) at the same time they send it to the other insurer (section 3). This way, there should never be an issue as to whether any priority dispute notices were given in time.
Co-operators v. Intact and Northbridge, Private Arbitration, Arbitrator Novick
In this priority matter, the claimant was struck as a pedestrian after disembarking his tractor trailer, of which he had regular use. He applied for SABS benefits to his wife’s personal insurer, Co-operators. Co-operators had placed Intact on notice for having insured the claimant on a personal policy. Co-operators had also placed Economical on notice, as preliminary investigation suggested that Economical insured the tractor trailer. However, after the 90-day notice deadline passed, it was discovered that Northbridge actually insured the tractor trailer. Intact then provided notice to Northbridge under Section 10 of O. Reg 283/95.
At the ensuing arbitration, first there was a dispute as to whether the claimant was an “occupant” of the tractor trailer when struck as a pedestrian by a passing car. Arbitrator Novick found that an objective observer would have considered him to be a driver of the tractor trailer at the time of the accident. Although the exact circumstances of the accident were unclear, the claimant was in the process of delivering a load at the time and was expected to return to the vehicle to do so.
Second, Northbridge disputed that it could be brought into the arbitration because it did not receive notice from Co-operators within 90 days of the OCF-1 being received. While Section 10 permits “second insurers” to serve other insurers with notice, Northbridge argued that it should not operate to “save” the first insurer where it failed to serve proper notice on an insurer higher in priority within 90 days. Northbridge argued that Section 10 notices should only be effective if the “second insurer” serving the notice is higher in priority than the “first insurer” which received the OCF-1.
Arbitrator Novick disagreed with Northbridge. She found that the 90-day notice requirement in Section 3 is intended to “get the party started”. Insurers who are later placed on notice under Section 10 may be brought into the arbitration proceeding regardless of how they stack up in comparison in comparison to the other insurers involved. Co-operators was not barred from pursuing Northbridge, which was determined to be the priority insurer.
Aviva v. Pafco, Allstate, MVACF, and Belair, Private Arbitration, Arbitrator Jones
This was a preliminary issue hearing regarding whether the arbitration was limitation barred.
O. Reg 283/95 requires that a priority arbitration be commenced within one year of the firstnotice provided under Section 3. In this matter, Aviva had provided its first notice to Pafco. It later provided a more detailed notice to Pafco and the remaining insurers. Aviva failed to commence the arbitration within one year of its first notice to Pafco. However, the arbitration was commenced before the 1-year anniversary of notices given to the other insurers.
The respondents argued that the entire arbitration was barred because it was not commenced within one year of the firstnotice provided. In support, the respondents relied upon Section 10(3), which states that all priority disputes in relation to a particular SABS claim are to be dealt with in “one arbitration”.
Aviva argued that its first notice to Pafco was not sufficiently detailed to be considered notice under Section 3. Alternatively, Aviva submitted that it should not be precluded from arbitrating against the other insurers, who it commenced arbitration against within one year of putting them on notice under Section 3.
Arbitrator Jones confirmed that notice from one insurer to another under Section 3 does not need to be overly detailed. Most significantly, he ruled that the entire arbitration was barred since it was not commenced within one year of the first notice provided to Pafco. Aviva was not permitted to have separate limitation periods for the other responding insurers, who could potentially bring Pafco back into the dispute.