Optional enhanced SABS insurer not priority insurer obliged to pay: court

Ontario Policy Change Form 47 contradicts, displaces Insurance Act’s priority rules

Optional enhanced SABS insurer not priority insurer obliged to pay: court
If they have more than one, claimants can choose from which insurer to file a claim

The Ontario Court of Appeal has ruled that the optional enhanced statutory accident benefits coverage (SABS) insurer is obliged to pay basic and enhanced SABS under the Ontario Policy Change Form 47 (OPCF 47) without regard for the priority rules of payment under the Ontario Insurance Act, R.S.O. 1990, c.I.8.

In Continental Casualty Company v. Chubb Insurance Company of Canada, 2022 ONCA 188, Ekstein suffered injuries from being hit by a vehicle. He had basic mandatory SABS coverage under a policy issued by Chubb Insurance Company of Canada. His company also purchased optional enhanced SABS coverage under a fleet policy insured by Continental Casualty Company over its company vehicles. Because Continental denied coverage, Ekstein claimed basic mandatory SABS from Chubb. Chubb initiated a priority dispute, claiming that Continental was the insurer liable.

Under s. 268 of the Insurance Act, a claimant may choose which insurer to claim SABS if he is a “named insured” under more than one policy.

The arbitrator ruled that Ekstein was the named insured under the Chubb policy and a “deemed named insured” under the Continental policy. Because it was chosen first, Continental was the priority insurer, said the arbitrator. 

Continental appealed. The Superior Court Appeal Judge (SCAJ) found the arbitrator’s finding unreasonable. Since Ekstein never used the company vehicles, he was not a “deemed named insured,” and therefore could not claim SABS from Continental, said the judge. Nevertheless, the judge found that Continental was obliged to pay under the terms of OPCF 47. Further, over Chubb’s objections, the judge also ruled that Chubb as the priority insurer was obliged to indemnify Continental for payments made to Ekstein.

Chubb appealed the Superior Court judge’s ruling that Ekstein was not a “deemed named insured” and its obligation to indemnify Continental for payments.

The appeal was partially granted.

The SABS Schedule stated that an individual is deemed to be the named insured of a policy if, at the time of the accident, the insured automobile is being made available for the individual’s regular use.

Read as a whole, the provision focused on the actual situation and not theoretical possibilities, said the court. Although having potential access, Ekstein never used the vehicles and there could be no “regular use” if there was no use at all, said the court. Because of this, the court agreed with the SCAJ that Ekstein could not be a “deemed named insured”.

However, the appellate court rejected the SCAJ’s ruling that Chubb was obliged to indemnify Continental. Because OPCF requires optional enhanced SABS insurers such as Continental to pay both basic mandatory and optional enhanced SABS, it displaced the s. 268 priority rules, said the court.

“Where applicable, … OPCF 47 requires the optional enhanced SABS coverage insurer, and not the s. 268 priority insurer, to pay both basic mandatory and optional enhanced SABS,” said the court.

Thus, the order requiring Chubb to reimburse Continental was set aside.

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