Canadian Underwriter

Insureds traumatized by witnessing car accidents are not entitled to benefits: tribunal

January 10, 2023   by David Gambrill

A woman at the scene of a car accident consoled by a man while answering police questions

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Insured drivers who suffer psychological trauma from seeing the aftermath of other people’s serious car accidents are not entitled to collect accident benefits, Ontario’s Licence Appeal Tribunal (LAT) has ruled.

That’s because named insureds who witness other people’s car accidents are not “involved” in those accidents, the tribunal confirmed in Gray v. Intact Insurance.

Hailey Gray was in her home in August 2019 when a vehicle struck a house near hers. She and her partner went to their neighbour’s house to investigate and saw a vehicle inside the house. Police advised them and other witnesses to go back “five houses.”

A large natural gas explosion then engulfed the house hit by the car. Gray and her partner were a few houses down the road when it happened. The explosion and fire destroyed multiple homes, including Gray’s home and car. She made a claim for accident benefits, saying she sustained psychological impairments as a result of the incident.

Her auto insurer, Intact Insurance, denied the claim, saying Gray was not involved in the automobile accident. Her psychological impairments stemmed from the natural gas explosion, not the automobile accident, the insurer argued. And the law has established a person who sees or hears an accident is not “involved” in that accident, the company added.

Ontario’s LAT sided with the insurer in a decision released last week.

“The [law] has established that the [auto insurer] should not be responsible for any impairments that arise out of the aftermath of an accident that has already occurred,” LAT adjudicator Tavlin Kaur wrote. “The automobile was no longer in use and operation by the time [Gray’s] impairments were established. Therefore, she cannot be found to have been in an automobile accident.”

Gray argued nothing in Ontario’s Statutory Accident Benefits Schedule (SABS) barred her from making a claim for accident benefits, since her non-physical injuries resulted from her being “involved” in the accident. She said she was involved in the accident because she was not merely a witness; her traumatic reaction to the event stemmed from her being in actual danger of physical harm.

Intact argued Gray was not “involved” in the accident just by seeing or witnessing the accident. But LAT took it one step further, noting Gray “did not even witness the automobile accident.”

The tribunal pointed to Gray’s testimony that she and her partner were watching TV and getting ready for bed around 10 p.m., when they “heard something that sounded like an impact.” They got dressed and went outside to see a vehicle “inside our neighbour’s house.”

“I recognize that this incident was an unexpected and traumatizing experience for [Gray],” Kaur wrote. “However, [she] did not see the automobile accident take place. She only witnessed the immediate aftermath.  Her statement supports the fact that she was not directly ‘involved’ in the automobile accident.”