Both insurers were equal in priority and must share legal responsibility: court
The Ontario Superior Court of Justice ruled that two insurers must equally share liability for a Statutory Accident Benefits (SABS) claim, overturning an arbitration decision that found one solely liable.
In Chubb Insurance Co. of Canada v. Zurich Insurance Company, 2024 ONSC 2929, Sukhvinder Singh's lawyer mistakenly submitted a SABS application to Chubb Insurance Company of Canada, believing it to be the automobile insurer after the rental company, Zurich Insurance Company's client, failed to provide insurance particulars.
The Supreme Court of Canada ruled that this mistake made Chubb an insurer for the purposes of Singh's SABS claim.
A second arbitration found Chubb solely liable for Singh's SABS benefits and ordered it to reimburse Zurich $998,368.99. Chubb appealed, contending that Zurich should be solely responsible.
The Superior Court determined that the second arbitrator erred by not analyzing the interplay between the automobile insurance legislation and the insurance priority dispute regulation. Despite this, the error did not lead to a complete reversal. Instead, the court concluded that both insurers were equal in priority and must share liability, each responsible for the 2 percent compound interest sanction for delays attributable to them.
The court noted that under s. 268 of the Insurance Act, the priority regime ensures that one insurer is identified as primarily responsible. Typically, Zurich, as the automobile insurer, would have been the priority insurer. However, Chubb became involved due to the rental company's failure to provide insurance particulars.
The regulation allows the injured party to apply for benefits from any available insurer, who must notify other insurers if another is higher in priority. Chubb's failure to notify Zurich within the 90-day period led to its permanent liability for the claim. The arbitrator's conclusion that Chubb should bear sole responsibility was deemed incorrect, as it did not consider the equal priority status of both insurers.
Ultimately, the court set aside the arbitrator’s award, imposing equal responsibility on Zurich and Chubb for Singh's SABS claim, except for the 2 percent interest payments for delays, which each insurer must cover for their respective periods of handling the claim. The court left it to the parties to calculate and adjust the financial consequences of the decision, awarding no costs for the appeal or arbitration.
