In a priority dispute, an out-of-province insurer was required to respond pursuant to legislative priority scheme

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Coseco v Liberty, [2019] ONSC 4918 involved an appeal arising from an arbitrator’s decision concerning the priority provisions found in s. 268 of the Ontario Insurance Act, R.S.O. 1990, c. I-8 (Insurance Act), and whether it applied to an out-of-province insurer for an accident that took place in Ontario.

Justice Nakatsuru upheld the arbitrator’s decision and dismissed the Appeal, finding that the out-of-province insurer whose policy covered the claimant, and who was a signatory to the Power of Attorney and Undertaking (PAU), was bound by section 268 of the Insurance Act in its entirety.  

Background

The claimant was a resident of the State of New York; insured under New York motor vehicle insurance policy, GMAC Insurance Company (GMAC). GMAC was not licensed to sell insurance in Ontario.

In July 2015, the claimant was a passenger in an Ontario-insured car when he was involved in a motor vehicle accident in Toronto, Ontario. The vehicle he was in was insured by an Ontario insurer, Coseco Insurance Company (Coseco). Liberty Mutual Insurance Company (Liberty) insured the spouse of the claimant and was also a New York State automobile insurance policy. GMAC was a signatory to the PAU.

The claimant applied to Coseco for statutory accident benefits under the Statutory Accident Benefits Schedule, O. Reg. 34/10 (SABS). Coseco accepted his application and initially paid his statutory accident benefits.

Arbitration

A dispute arouse between the insurance companies on whether the statutory accident benefits should be paid by GMAC, Coseco or Liberty.

Coseco commenced an arbitration proceeding to determine whether the priority applied under the circumstances, pursuant to section 268 of the Insurance Act. Coseco argued that priority lay with either Liberty as the insurer of the claimant’s spouse, or GMAC, as they would rank in priority under section 268 of the Insurance Act.

The arbitrator examined and interpreted the provisions of the Insurance Act, considering the authorities on point, relying particularly on the factually similar decision of Healy v Interboro Mutual Indemnity Insurance Co. [1999], 44 O.R. (3d) 404 (Ont. C.A.).

The arbitrator determined that section 268 of the Insurance Act did apply and that GMAC was the priority insurer pursuant to the section, and was required to respond to claimant’s claim.

Appeal

GMAC appeal the arbitration’s decision on the grounds that the arbitrator erred in finding s. 286 of the Insurance Act applied under the circumstances. GMAC argued that the Ontario legislation did not apply in the circumstances of the case since it would not accord with the territorial limits on provincial jurisdiction.

The appeal was dismissed. The Courtfound that the correct standard of review was that of reasonableness, as perIntact Insurance Co. v Allstate Insurance Co. of Canada, [2016] ONCA 609,  at para. 53. The decision was found to be reasonable and, in fact, correct.

The Court found that an insurer who signs the PAU is subject to the Ontario priority dispute scheme. The PAU made the priority provisions in the Insurance Act applicable to GMAC and terms of the PAU in regards to an accident that occurred in Ontario.

Even though GMAC was an out out-of-province insurer, the fact was a PAU signatory and policy covered the claimant, the Court found GMAC was bound by section 268 of the Insurance Act and was liable for the claimant’s statutory accident benefits for the accident that occurred in Ontario.

Takeaway

If an out-of-province insurer, whose policy covers an individual involved in a motor vehicle accident in Ontario, and that insurer has signed the PAU, the insurer could be found liable and bound by section 268 of the Insurance Act.

For more information, please contact Meghan Bell or another member of Dentons’ Insurance group.