Ontario Accident Benefits and Foreign Insurers

Ontario Accident Benefits and Foreign Insurers

By: Lindsay Charles, Lawyer, and Savannah Snyder, Student-At-Law

 

If you are injured in a car accident in Ontario, you are entitled to Statutory Accident Benefits. These are often referred to as no-fault benefits which are mandatory and included as standard automobile coverage in Ontario. No-fault benefits can cover costs such as medical, rehabilitation and attendant care costs and income replacement, among others.

However, consider the situation where a person drives their vehicle to Ontario, but is insured in Alberta or the United States, and is involved in an accident. Are they still entitled to Statutory Accident Benefits if they have insurance outside of Ontario?

The short answer is yes.

Foreign insurers, either out of province or in the United States, must file a Power of Attorney and Undertaking (“PUA”) with the Canadian Council of Insurance Regulators. This is necessary to ensure compliance with the Ontario’s Insurance Act.[1]

The PAU results in treating foreign insurers policy of insurance as an Ontario policy while that vehicle is in Ontario for certain required coverages, such as Ontario’s mandatory Statutory Accident Benefits.

Importantly, the Court of Appeal has recognized this interpretation of a PAU in the decision Potts v Gluckstein.

In Potts v Gluckstein,[2] the Plaintiff was injured in Toronto when an uninsured driver collided with her motorcycle, which was licensed in British Columbia. The issue became whether the plaintiff’s damages should be paid by the insurer under the reciprocal scheme for the enforcement of motor vehicle liability insurance policies in Canadian provinces and territories or through the Motor Vehicle Accident Claims Fund.

Under the reciprocal scheme, each participating insurer agrees to be bound by the law of the province where an action regarding a motor vehicle accident is brought. The insurer undertakes to appear in the action and not to set up any defence which would not be available if insured in the province where the action is brought.

At trial, the court held that the plaintiff’s damages should be paid under the reciprocal scheme. The insurer appealed, arguing that damages should be paid through the Motor Vehicle Accident Claims Fund.

The Ontario Court of Appeal held that insurer was precluded by the undertaking and section 25(1) (now section 45(1)) of Ontario’s Insurance Act[3] from setting up any defences which could not be set up by an Ontario insurer and that included the defence that the uninsured coverage was not available in the circumstances in British Columbia.

Therefore, an insurer from a different province could not deny liability for uninsured automobile coverage since section 231 (now section 265(1)) of the Insurance Act[4] makes uninsured automobile coverage part of an Ontario motor vehicle liability insurance contract.

The practical effect of this rule protects people involved in motor vehicle accidents in Ontario and recognizes the legislature’s intention for individuals to receive Statutory Accident Benefits, regardless of who is at fault. Not only does this protect drivers and passengers in Ontario, but also ensures that foreign insurers are treated equally with Ontario insurers. Notably, foreign insurers may find themselves with greater exposure than they intended due to vehicles they insure operating in different jurisdictions.

[1] Insurance Act, RSO 1990, c. I.8.

[2] Potts v Gluckstein, 1992 CanLII 7623 (ON CA).

[3] Insurance Act, supra note 1, s 45(1).

[4] Ibid, s 265(1).

Lindsay Charles

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