What happens when a Certificate of Automobile Insurance specifies that the policy includes coverages under certain endorsements, when those endorsements never make it onto the policy?
The Certificate and OPCF Endorsements
Ontario’s standard automobile policy (OAP1) offers a number of forms and endorsements that FSCO approves.
One such form is the Certificate of Insurance, which is an approved form that sets out, among other things, the specific terms of coverages and endorsements that form part of the policy in question. Although the standard Certificate is approved by the Superintendent of Insurance, insurers are allowed to submit their own version of a Certificate for approval, something that many insurers do.
Meanwhile, two of many available endorsements to the auto policy are, as follows:
An OPCF 23A endorsement provides for payment to a lienholder in the event of damage to the vehicle.
An OPCF 5 endorsement allows the lessor to rent or lease automobile(s) to the lessee who has completed the Ontario Application for Automobile Insurance - Owner’s Form (OAF 1). The endorsement expressly allows a lessor to rent or lease a motor vehicle to a lessee who has its own auto insurance policy. It also provides the standard auto coverages to a lessee under the policy as if the lessee were the named insured.
In Coast Capital v. Old Republic, a trucking company named 62254641 Canada Inc. (“622”) leased a 2008 Peterbilt tractor from a third party. Old Republic issued a Certificate of Automobile Insurance to 622 that described that vehicle. The Certificate also included a box for describing lessors and lienholders. The box stated:
Lienholders (to whom loss may be jointly payable) (if applicable)
AS PER OPCF 23A FORMS
Lessor (if applicable)
AS PER OPCF 5 FORMS
On June 15, 2012, 622 leased two more tractors, this time from Coast Capital. Coast Capital had informed its insurance broker in writing that it wanted third party liability coverage in the minimum amount of $2,000,000, and indicated “The policy must contain an OPCF #5 Permission to Lease or Rent Endorsement.” This document was found in Old Republic’s underwriting file. However, there was no evidence as to when it received that document.
On July 5, 2012, Old Republic issued an OPCF 25 Change Form showing 622 as the insured, and listing the two new Peterbilt tractors. The new tractors were identified as automobiles 2 and 4. The policy change that was noted on the form indicates “Automobile added to policy (Auto No. 2 and 4)”. The OPCF 25 also listed Coast Capital as the lessor of vehicles 2 and 4. It also recited that “all other terms and conditions of the policy remain the same”.
Of note, the OPCF 25 listed other related Endorsements that were mentioned in the original Certificate but failed to mention the OPCF 23A or 5 forms.
On November 12, 2012, one of the 2009 leased Peterbilt tractors (auto 2 or 4) was involved in a motor vehicle accident. Old Republic denied liability coverage to Coast Capital, taking the position that the OPCF 5 was not part of the policy.
The application judge held that the policy included an OPCF 23A form but did not contain an OPCF 5 form. He held that the OPCF 5 was never part of the Certificate of Insurance or added by the OPCF 25 form.
The Court of Appeal allowed the appeal and found coverage for Coast Capital under the policy. At the start of its analysis, the Court held that coverage under the standard auto policy is defined by the Certificate of Insurance on any given policy
The Certificate in question was not on the default Certificate form approved by the Superintendent, but it was on a FSCO approved form that Old Republic had submitted for its use. The Court noted that Old Republic had added the phrase “AS PER OPCF 5 FORMS” to the original Certificate in this matter, but that the phrase was not included on Old Republic’s approved form. The Court held that if Old Republic added the reference to the OPCF 5 on the Certificate in this case, the Certificate must have intended to include coverage for lessors and lessees – even though the actual OPCF 5 form was not attached to this policy. Further, had Old Republic included the phrase “AS PER OPCF 5 FORMS” to its approved Certificate, it would mean that its usual practice was to insure both lessees and lessors (as the OPCF 5 would do). The court concluded that if there was any ambiguity, it was caused by Old Republic’s uses of an “unapproved altered standard form”, and it would have to bear the consequences of doing so.
The Court also held that this finding was consistent with the commercial realities of the transaction. It concluded:
I conclude that the OPCF 5 endorsement is part of the Certificate; the insurer intended to provide liability coverage to both the lessor and lessee. The OPCF 25 Change Form did not delete that coverage, but added new vehicles. Absent deletion of the OPCF 5 coverage, I conclude that Coast Capital is entitled to the benefit of that coverage. Old Republic’s insertion of the OPCF 5 language into the Certificate accords with the commercial reality of the transaction. Old Republic was providing automobile insurance to a trucking company’s fleet. The trucking company leased multiple vehicles, to the knowledge of the insurer. It makes commercial sense for the lessors who were financing the purchase of the vehicles to protect themselves from liability as the owners of those vehicles when they would have no control over the trucking company operations.
There is nothing in the Certificate that suggests that the liability coverage described in the policy is solely for the benefit of the lessee.
The major takeaway from this case is that the Certificate of Insurance governs coverage under the policy. If the Certificate references a particular Endorsement on the policy that is not necessarily attached to the policy, the Court will defer to the coverage specified on the actual Certificate used in the case to determine coverage.
Insurance companies that insure leased/rented vehicles – and leasing/rental companies that lease/rent vehicles to others -- should review their various Certificates on a case-by-case basis to make sure they contain the coverages that the parties intended to be covered.
The plaintiff was successful in his lawsuit against a speedway for injuries sustained while moving out of the way of a stock race car that came off its track. At the end of the seven-day trial in Belleville, the parties could not agree on costs.
In coming to its decision, the Court considered various issues, including the refusal of the defendant (i.e. the defendant’s insurer) to participate in mediation despite numerous proposals from the plaintiff for same.
The Court stated that while mediation was not mandatory for the jurisdiction, a party’s unreasonable refusal to mediate can attract an adverse costs award. The factors considered in such a determination include the nature of the dispute, the merits of the case, whether other methods of settlement have been attempted, whether the costs of mediation would be disproportionately high, whether mediation would delay a trial and whether the mediation had a reasonable prospect of success.
In this case, the Court found that the insurer took a “tough and uncompromising stance” in refusing mediation as, contrary to the insurer’s position, the facts of the case indicated that neither side had a strong position on liability. As such, the Court found that the defendant’s refusal to mediate deprived the parties of an opportunity to settle the case without the necessity for trial and without incurring substantial costs.
In practical terms, the Court would have awarded the plaintiff approximately $190,000 (plus HST) in costs but for the defendant’s unreasonable refusal to mediate, resulting in an award of $210,000 (plus HST).
This decision serves as a cautionary tale for those jurisdictions where mediation is not mandatory. In these jurisdictions, insurers should think long and hard before refusing to participate in a requested mediation as it may end up costing them in the end.
Shalini defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, as well as accident benefits litigation and arbitration and priority and loss transfer disputes.
Two recent decisions from Ontario highlight that unlike fine wine, wrongful dismissal claims do not get better with age. The Superior Court decision of Kennedy v. RBC, and the Court of Appeal decision of Bailey v. Milo-Food & Agricultural Infrastructure & Services Inc, highlight that limitation periods can be live issues where employees engage in protracted pre-litigation negotiations or are provided a long period of working notice. These decisions re-affirm the general rule that once proper notice of an employee’s termination is given, the limitation clock starts to run.
In Kennedy, the defendant brought a summary judgment motion to dismiss the plaintiff’s action as limitation barred. The plaintiff had been an employee of Royal Bank of Canada in Toronto. She moved to work at a Royal Bank in Trinidad and Tobago. For reasons that are unclear, sometime prior to November 27, 2009, the plaintiff resigned from the company. She subsequently retained counsel and attempted to rescind her resignation. On December 17, 2009, RBC determined that the employment relationship was irreparably damaged and advised that they would be offering her a severance package. What followed was several months of back and forth negotiations between lawyers for the parties. Eventually, no settlement was reached and the plaintiff issued a claim sometime after May 26, 2012.
The plaintiff attempted to rely on s. 5(1)(b) of the Limitations Act to claim she had not “discovered” her full claim until July or November 2010, when certain run-off payments from RBC were not received. Nakatsuru J. disagreed. The correspondence between the parties made it abundantly clear that by May 26, 2010, the plaintiff was aware of her claims and was explicitly threatening litigation. In finding that the plaintiff’s claim was limitation barred, the judge outlined several basic principles:
Generally speaking, a cause of action in contract arises when the alleged breach occurs;
In wrongful dismissal claims, the breach occurs when insufficient notice is provided upon termination;
A plaintiff does not need to know the full extent of the damages suffered, but merely that they are aware some loss occurred due to the defendant’s actions;
When addressing the issue of discoverability, the test is objective. It requires a determination of when a reasonable person in the plaintiff’s position with her abilities and circumstances would have been alerted to the elements of the claim; and
Engaging in negotiations to extract a tactical advantage from a party does not stop the limitation clock.
Nakatsuru J. also noted that the plaintiff was represented by counsel prior to her dismissal from RBC. This was far removed from the situation where an unsophisticated lawyer-less ex-employee was strong along by her employer and then failed to commence litigation in a timely fashion. Accordingly, the plaintiff missed the limitation period. Her clam was dismissed.
A similar result was confirmed in Bailey by the Ontario Court of Appeal. In that case, the plaintiff was advised on March 7, 2013 that his position was no longer sustainable. On March 18, 2013, he was given two years of working notice ending on March 22, 2015. He worked until that date and then commenced his claim on December 21, 2015. On a motion for summary judgment, the judge found that the limitation period began to run on the day he was provided notice, March 18, 2013, not the last day he worked. The Court of Appeal confirmed that this was the correct approach to take.
The take away from these decisions is that both employers and employees should be aware of when the notice of termination was given. If the notice is clear and unequivocal, the clock starts to run. Employees who wait too long may find themselves shut out of an otherwise meritorious claim. Similarly, employers should be cognizant that an employee’s attempt to enter into protracted settlement negotiations does not stop the limitation clock. As long as the employer does not take steps that might support a discoverability argument under section 5(1)(b) of the Limitations Act, this may be a strong defence to raise.
The plaintiff’s claim relates to a slip and fall that occurred, in a washroom, at Casino Rama on February 16, 2015. The plaintiff did not notice that the floor was wet, as she entered the washroom, but admitted she did notice a custodian and a yellow caution sign on the floor. The plaintiff claims that the floor was wet and slippery, which caused her to fall.
Casino Rama’s position was that the plaintiff had failed to provide any direct evidence that there was an unsafe condition and, rather, she had “rationalized the explanation for the fall.”
The court relied on the Hamilton v Ontario Corporation 2000533 decision where the court granted the defendant’s motion for summary judgment. In this decision, the plaintiff “subjectively believed” that her fall was caused by a slippery vinyl floor in the corridor outside of her apartment, but was unable to provide any objective evidence of anything that could have caused the floor to be slippery. Further, there was no evidence of a general lack of maintenance in the corridor that could give rise to a determination of an unsafe condition to which the plaintiff’s fall could be connected, causally, or by reasonable inference.
In Rietta the court agreed with the plaintiff’s assertion that her case differs from the Hamilton decision in that there are two objective facts: the presence of the custodian and a yellow caution sign in the washroom. The court felt that these facts gave rise to a triable issue and the defendant’s motion was dismissed.
This decision makes it clear that no evidence of a substance or debris in the area of a fall will not be enough to be successful on summary judgment. Objective evidence of “something” that could have caused an unsafe condition will create a triable issue. This decision also reiterates that solid maintenance logs confirming regular patrolling are key for defending slip and fall cases.
Still looking for the perfect Father’s Day gift? Can’t find that special tie that says “I love you Dad”?
Stop looking and get Dad the gift that says “You’re the best Dad ever!” by giving him his very own copy of Auto Insurance Coverage Law in Ontario.
Think of those frequent moments when Dad would rather skip a round of golf to read about what makes a motor vehicle an “automobile”. Or when he would prefer to pass on poker night so he can sit in his favourite chair and read the latest on the territorial limits of Ontario’s automobile insurance policy.
Read what one lucky dad had to say:
I remember Father’s Day 2017 like it was yesterday. It was sunny. There was a brisk northwesterly wind. The neighbour was mowing her lawn. The local children were playing street hockey. Brooks Koepka won his 1st major with a 16-under par 272 round at Erin Hills, Wisconsin.
I was bummed. My family didn’t take me out for brunch and I was starving. The Jays game was sold out. My pub ran out of Guinness.
All was lost. A bust. Worst Father’s Day ever.
But then, straight out of left field, my youngest called me into the den. My family was sitting on the couch. The kids gave me a wrapped gift.
It was a rectangular, slightly bendable object. It was three dimensional, measuring roughly 9 inches long, 6 inches wide, and half an inch thick.
I suspected it might be a book.
I started ripping the wrapping paper. My wife reminded me to go slowly so we could reuse the giftwrap. I could feel the sweat beading down my brow as I started peeling away the layers of what seemed like an endless amount of paper. The anxiety was overwhelming.
As that last layer of wrapping paper peeled away, I could see what appeared to be an image of a gargantuan yellow umbrella covering a red car.
Could it be? Was it?
My very own copy of Auto Insurance Coverage Law in Ontario!!!!
I LOVE my children!!!
Imagine the opportunity to spend a relaxing summer evening with Dad at the cottage, sitting by the camp fire, and reading about direct compensation property coverage under section 263 of the Insurance Act. The birds begin to sing that sweet summer song. The evening air smells like warm apple pie. And just when the moment couldn't be any more perfect, Dad reads out loud:
In 1990, Ontario decreased the need for litigation for property damage claims by removing the right to pursue a court action against other parties. The province introduced s. 263 of the Insurance Act, a direct compensation system for property damage claims. It is referred to as “direct compensation” because it focuses on the insured collecting insurance proceeds directly from their own insurer; the insured no longer has a right to pursue other parties who were at fault for the accident. As a result, the insurer cannot pursue these claims either. Indeed, the insurers’ subrogated claims under the old system were derived from the insureds’ own rights of action.
Make June 17, 2018 a day to remember for Dad. Say "Happy Father’s Day Dad" with the gift he’s always wanted! Order your copy of Auto Insurance Coverage Law in Ontario today and let Dad know that you are no longer a “dependant”, as that word is defined in section 3 (1) of the Statutory Accident Benefits Schedule.
The son of a plaintiff lawyer, Daniel decided in law school that he wanted to work for the insurance industry. Read more...
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...