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.
On May 9, the Ontario Superior Court released a decision which reminds us of three important lessons:
A court will allow juries to use their common sense to make decisions;
Telling your insurer you had a fur coat when you didn’t will probably be considered a wilful misrepresentation; and,
Relief from forfeiture is not an available remedy when you make a wilful misrepresentation.
In 2003, a fire occurred in the Pinders’ home, the Plaintiffs. The Pinders submitted a claim to their insurer, Farmers’ Mutual Insurance Company, for various items that they claimed were lost in the fire. Farmers’ Mutual denied coverage citing, among other things, that the Pinders were using portable electric heaters throughout their home and that they made wilfully false statements on the Proof of Loss form. In December 2017, a jury trial was conducted.
The jury decided that the Pinders were in fact using portable electric heaters to warm their house (presumably voiding coverage) and they did make wilfully false statements in the Proof of Loss form effectively voiding their insurance coverage. The Pinders brought a motion to, among other things, not enter the jury’s verdict on account that there was no evidence to support the jury’s finding and grant them relief from forfeiture.
Was there Evidence to Support the Jury’s Finding?
Yes. Justice Vallee noted that a judge may refuse to accept a jury’s verdict only when the decision is “bad in law or devoid of evidentiary support” – in other words, if there is no evidence to support the conclusion. This was not such a case.
The Pinders argued that throughout the trial, it was never established or even uttered that they used portable electric heaters to warm the majority of their house. Counsel for Farmers’ Mutual urged the jury to consider the totality of the evidence and infer that most of the house was in fact being warmed by portable heaters. Although circumstantial, Justice Vallee decided that there was enough evidence to allow the jury to come to their conclusion.
Is Relief from Forfeiture an Available Remedy?
No. Relief from forfeiture is a principle enumerated in s.129 of the Insurance Act and s.98 of the Courts of Justice Act. It is an equitable remedy that allows a court to “look past” an insured’s improper compliance with certain contractual or statutory requirements and force an insurer to maintain coverage for a loss.
Justice Vallee cited several cases which were appropriate candidates for such a remedy: a late filing of a notice to arbitrate, a Proof of Loss form that did not provide adequate particulars of items lost, or a party’s exaggeration of a claim designed for “puffery” or to establish a better negotiating position.
In this case, Farmers’ Mutual argued that the Pinders’ policy was void because they wilfully misrepresented items on the Proof of Loss. This was differentiated from alleging fraud as that would require the element of intent to deceive. During the trial, Ms. Pinder was cross-examined regarding each item on the Proof of Loss. She admitted that some items were duplications, some were described incorrectly, some values were wrong, and that some items didn’t exist. Among those items was a fur coat which, despite significant investigation, could not be proven to have ever been bought. In fact, considering that the Pinders were receiving social assistance and were using their RRSPs at the time in question, they simply could not have made such a lavish purchase.
The jury had the latitude to believe or not believe what the Pinders were saying and more importantly were not tasked with finding intent to deceive Farmers’ Mutual. The jury concluded that the Pinders did not make wilfully false statements regarding 29 items and did make wilfully false statements regarding 39 items, including the fur coat.
Justice Vallee concluded that this was not a case of improper compliance but one of wilful misrepresentation which did not invite relief from forfeiture as an available remedy.
Judgment was entered in favour of Farmers’ Mutual.
The moral of this story is simple: wilful misrepresentation does not require an insured’s intent to deceive their insurer – fraud, on the other hand, does. An insured has an obligation to investigate and report, to the best of their ability, the items that were lost and their accurate value. The courts will allow some flexibility regarding compliance with such contractual reporting obligations and may find it equitable to relieve an insured if strict compliance isn’t satisfied – wilful misrepresentation is not an instance when such relief will be granted.
It is also important to remember that courts will typically trust juries to use their judgment and life experience to consider the available evidence and come to their appropriate conclusions. We, like the courts, should trust juries to conclude that if it walks like a duck and quacks like a duck, it’s probably a furry duck.
Stas practices in insurance-related litigation. He has a broad range of experience including tort claims, accident benefits, subrogation, priority and loss transfer disputes, WSIB matters, and fraudulent claims. Read more...
Following the creation of the tort of intrusion upon seclusion in 2012, we have seen numerous cases that have clarified the application of same. In the most recent pronouncement, Oliveira v. Aviva Canada Inc., the Court of Appeal dealt with whether the duty to defend extends to an employee who allegedly improperly accessed the Plaintiff’s confidential information.
The facts of the underlying claim were as follows. The Plaintiff, J.L., was admitted to the emergency department of a hospital because of postpartum psychosis. Ms. Oliveira was a nurse at the hospital. The Plaintiff was treated there and at another hospital for approximately 18 days. Following her return home, the neighbour’s son began asking pointed questions about her health. J.L.’s health status, however, had never been shared with the neighbour. The Plaintiff became suspicious after she realized that the neighbour was a relative of Ms. Oliveira. When J.L. complained to the hospital, an investigation revealed that Ms. Oliveira had repeatedly accessed the Plaintiff’s hospital record without any valid reason.
Ms. Oliveira brought an Application for coverage under the hospital’s insurance policy. In this decision, the Court noted that the Hospital was insured by Aviva pursuant to a “Professional and General Liability and Comprehensive Dishonesty, Disappearance and Destruction Insurance Policy.” Hospital employees, like the Applicant, were additional insureds under the policy. Aviva argued that they did not owe a duty of care to Ms. Oliveira because the policy only applied where employees were “acting under the direction of” the Hospital and “only in respect of liability arising from the operations of” the Hospital. Since the Applicant was not doing either, then there was no duty to defend.
Specifically, Aviva alleged that Ms. Oliveira was a “lone wolf, deliberately engaging in activities that [were] not in any way related to her employment at the Hospital, and in fact [were] contrary to her obligations as an employee of the Hospital.” As she abused her position to access private information, she could not be acting under the direction of the Hospital. The Application judge rejected this argument because the policy specifically provided coverage for “invasion or violation of privacy” and for “invasion or violation of the right of privacy.” The policy did not limit coverage for privacy breaches or other torts to Hospital employees within a patient’s circle of care. The only qualification was that the employee had to be acting under the direction of the Hospital. The Judge held that whether an employee was acting under the direction of a named insured (in this case the Hospital) did not turn on whether there was actual personal control at the moment of the incident. Rather, control flowed from the relationship generally and from the employer’s ability to terminate the employee’s employment. The Court found that Ms. Oliveira was acting under the direction of the Hospital for the purposes of determining whether Aviva owed her a duty of care.
The second component that needed to be satisfied in order for the duty of care to be extended was that it only covered employees of the Hospital in respect of liability “arising from the operations” of the Hospital. On this point, Aviva argued that since Ms. Oliveira was not within the patient’s circle of care, her conduct did not arise from the Hospital’s operations. The Judge noted that in a hospital setting, intrusion upon seclusion captured inappropriate access to medical records. As a result, Aviva sought to use the very act that they agreed to insure against as an excuse to deny the duty to defend. The Court held that to accept Aviva’s argument would nullify a significant portion of the privacy coverage that the policy purported to afford. This was improper.
Aviva’s appeal was dismissed by the Court of Appeal who found that the language of the policy clearly covered claims for the invasion of privacy which included intrusion upon seclusion. Specifically, the Court of Appeal held:
The applicant was employed by the hospital as a nurse and while on duty, in the course of the hospital’s operations, to use the language of the policy (which would include the maintenance of patient’s health records), she accessed the records that she had apparently no business doing because she was not involved in J.L.’s care. The applicant was employed by the hospital, (she was essentially an employee 24/7) but was only acting under the direction of the hospital when she was on duty as such.
The Court of Appeal held that the common sense interpretation of the language supported a finding that Ms. Oliveira was entitled to a duty to defence. It was plain that the policy, in covering invasion of privacy, intended to cover the type of conduct alleged by the Plaintiff.
In light of this decision, in instances where the policy provides for broadened privacy coverage, the insurer is unlikely to be able to rely on those same provisions to deny a duty to defend. It remains to be seen, however, whether a duty to indemnify will be ordered in similar circumstances.
A recent Court of Appeal decision outlined the breadth of an insurer’s duty to defend.
In Ernst v. Northbridge Personal Insurance Corporation, the application judge ruled that the insurer had a duty to defend the driver of an ATV. The insurance policy extended coverage to an ATV if it was owned by the defendant driver and the defendant was not an occupier of the property on which the accident occurred (note, we are seeing more and more of these types of cases). The defendants were in the process of purchasing both the ATV and the property from the former owners, however the accident occurred before the closing date. The insurer denied coverage on the basis that at the time of the accident, the ATV was being operated on the ATV owner’s private property, and therefore was not considered an automobile.
In coming to the decision that the insurer was obligated to defend the defendant driver, the application judge explored possible outcomes rather than simply evaluating the pleadings, and he assumed that the defendants were not occupiers of the property (thereby triggering a duty to defend) because the former/potential current owners of the ATV were occupiers of the property at the time of the accident. Of note, it was unclear at the time of pleadings whether the defendants had finalized the purchase of the ATV from the original owners, as they were in the process of doing so.
On appeal, the Court of Appeal noted the law governing pleadings explained in Monenco Ltd. V. Commonwealth Insurance Co.,  2 S.C.R. 699, 2001 SCC 49 (CanLII), stating:
Whether an insurer is bound to defend a particular claim has been conventionally addressed by relying on the allegations made in the pleadings filed against the insured, usually in the form of a statement of claim. If the pleadings allege facts which, if tru, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence. This remains so even though the actual facts may differ from the allegations pleaded.
[I]t is not necessary to prove that the obligation to indemnify will in fact arise in order to trigger the duty to defend. … The mere possibility that a claim falling within the policy may succeed will suffice.
The Court noted that the pleadings included allegations both that the defendants were owners of the ATV and occupiers of the property, and that the ATV’s original owners were the owners of the ATV and occupiers of the property at the relevant time. The application judge found that the pleadings alleged facts that would permit a finding that the original ATV owners, and not the defendants, were the occupiers at the relevant time. Even if this was not ultimately factual, it was sufficient to trigger the appellant’s duty to defend. The Court found that there was no requirement that the allegations against the defendants be expressly pleaded in the alternative for the duty to defend to arise. The Court took no issue with the application judge reading the pleadings widely, and adopting a reading of the pleadings that supported a duty to defend.
The takeaway from this decision is that courts will read pleadings with a wide latitude in order to find a duty on an insurer to defend an insured. If there is a possibility, based on the pleadings, that there may reasonably be a situation in which the insurer will have the duty to defend, even though those facts might ultimately be proven false, there is a high possibility that a court will find a positive duty to defend. Insurers should hesitate to refuse to defend their insured if the pleadings are structured in a way that a court would find that a duty is possible. If you are unsure of your exposure in this regard, contact your lawyer to provide their opinion.
Gabe Flatt has an insurance law practice that has focused exclusively on insurance defence for the past 8 years. He has developed an expertise in complex priority and loss transfer disputes as well as general coverage issues.
On April 10, 2018, the Divisional Court released an important decision regarding ATV incidents outside of Ontario. Specifically, in Benson v. Belair Insurance Co. Inc., the Divisional Court considered whether the Claimant was entitled to statutory accident benefits arising from an incident while in British Columbia.
Mr. Benson was a resident of Ontario who had been living in British Columbia. He was injured after he fell from an ATV that was being driven on a public trail owned and occupied by the Northern Rockies Regional Municipality. The ATV was owned by a resident of British Columbia. Since there was no requirement that the ATV be insured in British Columbia, it was not.
At the time of the accident, Mr. Benson had his own insurance policy with Belair in Ontario. The policy was a standard OAP-1 that did not include coverage for any ATVs.
The Claimant applied under his own insurance policy for accident benefits. The Insurer denied coverage because the ATV was not an “automobile” within the meaning of the Statutory Accident Benefits Schedule – Effective September 1, 2010. The Claimant filed a dispute with the Financial Services Commission of Ontario. The Arbitrator found that the ATV was not an automobile. While the Claimant appealed the finding, the Director’s Delegate dismissed the appeal.
On Judicial Review, the Divisional Court noted that the question to be determined was whether an ATV that was owned, registered and operated in British Columbia was an automobile covered by the Ontario SABS.
The Divisional Court held that the appropriate legislation to be applied was the legislation in British Columbia. The ATV was operated and the accident happened in British Columbia. The decision to have, or not to have, insurance for this vehicle was made in British Columbia. As a result, British Columbia legislation must determine whether there is entitlement to benefits resulting from the accident.
Reference was made to the Court of Appeal’s decision in Adams v. Pineland Amusement Ltd. (2007 ONCA 844) which found that in determining a case of liability insurance, “the proper question is whether the vehicle [involved in the accident] required motor vehicle insurance at the time and in the circumstances of the incident.” Applying this question in the present case, at the time and in the circumstances of this accident, the ATV was not insured.
The Divisional Court also held that there was no basis to claim that Mr. Benson had a legitimate expectation that Belair would cover an accident involving ATVs as there were no ATVs listed on the subject insurance policy.
The last issue considered by the Divisional Court was the Ontario Off-Road Vehicle Act which stated that “no person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy” under the Ontario Insurance Act. The Divisional Court concluded that it was reasonable to assume that the provision only required this of ATVs in Ontario, not ATVs in British Columbia.
This decision is of assistance to insurers who are presented with claims outside of Ontario. It is clear that in determining whether the vehicle is an “automobile” within the meaning of the SABS, the trier of fact will consider the applicable law in the jurisdiction where the incident occurred; not the law in Ontario. A word of caution, however, the Divisional Court has left the door open for another party to argue that there was an expectation that the vehicle they were operating was an “automobile” under the SABS. This limited exception is only where a similar vehicle was listed on their own Ontario insurance policy.