A priority dispute between Wawanesa, Northbridge and Allstate arose 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.
See Wawanesa v. Northbridge and Allstate, (Arb. Samworth, May 4, 2018)