A company CEO who has both personal and commercial auto insurance is not considered to be a “deemed insured” under the commercial auto policy if he has never before driven a company vehicle – even if he had access to the company vehicles, the Ontario Court of Appeal has ruled.
Secondly, an insurer providing optional enhanced accident benefits has to pay both mandatory coverage and enhanced benefits, and cannot go after the first-priority insurer to get the mandatory payment of the benefits back.
Thus, the Appeal Court decided a complicated case that touches on multiple areas of the province’s convoluted priority dispute resolution process.
The dispute arose in July 2015, when Peter Ekstein, the owner, president and CEO of a forestry products company, suffered catastrophic injuries when he was hit by a pickup truck while jogging near his cottage.
Ekstein had basic mandatory statutory accident benefits schedule (SABS) coverage under his personal automobile insurance policy issued by Chubb Insurance Company of Canada. In addition, his company had purchased optional enhanced SABS coverage under a fleet policy issued by Continental Casualty Company for his company’s vehicles.
Continental denied Eckstein’s policy provided optional enhanced SABS coverage, and that Ekstein had coverage under its policy. Ekstein then claimed basic mandatory SABS from Chubb. Chubb subsequently initiated a priority dispute, claiming Continental was the insurer liable to pay SABS to Ekstein.
In April 2018, an arbitrator found Ekstein was the named insured under the Chubb policy and a “deemed named insured” under the Continental policy, since he met the “regular use” requirements in Continental’s policy. Essentially, the arbitrator found that Ekstein was the boss of the company, and so he had regular access to use of any vehicles in his fleet, even if he had never driven any of his fleet vehicles before.
The Ontario Superior Court overturned the arbitrator’s decision, finding it unreasonable. It found Ekstein was not a “deemed insured” under Continental’s policy, as he had never driven any of the vehicles in the fleet, and therefore he could not elect to use Continental’s policy instead of the primary insurer’s policy under Chubb.
The Appeal Court agreed with the Ontario Superior Court on this point.
“In this case, the primary issue is regular use,” the Appeal Court ruled. “Mr. Ekstein had never made any use of company vehicles. Accordingly, the primary issue was not whether a company vehicle was available to him at the time of the accident. Rather, it was whether a company vehicle was being made available for his regular use at the time of the accident…
“Like the [Superior Court Judge], I fail to see how availability for regular use can be imputed in the absence of any use up to the point of the accident.”
That said, under the province’s rules for enhanced optional benefits, the Superior Court found Continental was obliged to pay both mandatory and enhanced accident benefits to Ekstein.
Continental tried to claw back the mandatory benefits from the priority insurer, Chubb. The Ontario Superior Court allowed this, but the Court of Appeal ruled an insurer providing mandatory and enhanced benefits has no recourse to the priority sequence in the priority dispute rules.
“The OPCF 47 endorsement [granting optional enhanced auto benefits] changes everything and, provided that the claimant satisfies the four conditions present in the endorsement, the optional benefits insurer is required to administer both mandatory and optional benefits coverages without regard for the priority of payment rules in Section 268 of the Insurance Act,” the Appeal Court ruled.
“I conclude that the [Superior Court judge] erred in holding that liability for SABS can be bifurcated under s. 268(2) of the Insurance Act [which sets out the priority sequence of insurers]. I would therefore set aside his order requiring Chubb to reimburse Continental for the cost of basic mandatory SABS payments and all expenses associated with administering those benefits.”