Actions by Insured against Insurer – Limitation Period not always Certain

Shaver v. Co-operators General Insurance Co. [2011] AJ No. 1411

Mr. Shaver was injured in a three vehicle accident on July 14, 2000 with one other identified driver. The Motor Vehicle Accident Claims Fund accepted liability for the accident and consented to a partial judgement in Mr. Shaver’s favour for $100,000.00. This judgement was entered on January 19, 2010.

Mr. Shaver found this compensation to be inadequate and issued a claim against his insurer, the Co-operators, on July 29, 2010 based on the SEF 44 endorsement in his policy:

Every action...against the insurer...under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant...knew or ought to have known that the quantum of the claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.

The Co-operators brought a summary judgment motion in Alberta arguing that Mr. Shaver was out of time as more than 10 years had passed since the claim arose. Mr. Shaver argued that his claim against the Co-operators arose only on January 19, 2010.

The court held that the limitation period in this endorsement allowed an injured person to sue later than the ultimate 10 year statutory limitation period in cases where the insured learned of inadequate insurance or of total claims exceeding the insurance limits after the expiry of that limitation period. The Co-operators appealed this decision to the Alberta Court of Appeal.

The Alberta Court of Appeal upheld the lower court’s decision, citing the principle provided by the Alberta Court of Appeal in Wawanesa Mutual Insurance Co., [1994] AJ No. 126:

An insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages.

In the case at hand, both parties agreed that it was not until January 19, 2010 that Mr. Shaver knew that the torfeasor’s coverage would not be sufficient.

- Kristen Dearlove, Student-at-Law

Automobile Policy Exclusions

The Superior Court of Justice has re-emphasized the requirement that an insurer must take appropriate steps to bring exclusions to the insured’s attention where the effect of an exclusion will have the harsh result of denying coverage under an automobile policy.

In GMAC Lease Co. Corp v. Lombard Insurance (2007), 87 O.R. (3d) 813, at paragraph 9, the Court of Appeal held that an insurer must provide the insured with a copy of every endorsement, per section 232(3) of the Insurance Act. The fact that an insurer can provide a certificate of insurance instead of the policy does not take away the duty imposed by section 232(3).

The obligation then is to provide the policy or certificate in an improved form as well as a copy of every endorsement. Since the insurer had failed to comply with section 232(3) of the Insurance Act by failing to deliver a copy of the OPCF 28A endorsement, excluded driver, the insurer cannot rely on the exclusion.

Justice Chapnick more recently in Chen Estate v. Chung, [2010] O.J. No. 5086 (SCJ), reiterated the Ontario Court of Appeal’s decision in GMAC Lease Co. Corp. v. Lombard Insurance.

Court rejects argument deductible does not apply to awards of exactly $100,000

Van Winckle v. Siodlowski, [2009] O.J. No. 4807 (S.C.J.).

In this motor vehicle accident case, the jury awarded the plaintiff exactly $100,000 in non-pecuniary general damages. The plaintiff made the creative argument that the deductible should not apply where the award is exactly $100,000. Section 267.5(8) provides the deductible does not apply where the amount of non-pecuniary general damages "would exceed $100,000".

The Court held that "exceed" means greater than, not greater than or equal to. The deductible applied.

The decision makes sense. If the legislative had meant "greater than or equal to" $100,000, it would have said so.

Ontario Government Proposes New Auto Insurance Options

According to The Globe and Mail, the Ontario government is proposing to allow consumers to purchase less auto insurance coverage in order to keep down their auto insurance premiums.

Proposed changes include:

- lower the minimum medical and rehabilitation coverage for auto insurance to $50,000 from the current $100,000;
- adding a new deductible for property damage; and
- removing an insurer's right to an assessment from their own doctor if they disagree with the findings of the insurance company's health provider.