March 8, 2011 by Canadian Underwriter
An insurance company cannot presume a policyholder knows his or her insurance has been cancelled when a registered letter informing the insured about the cancellation is stamped “unclaimed” by Canada Post, an Ontario arbitrator has found.
Marcia Walker was injured in a motor vehicle accident on Aug. 11, 2008. She had purchased a President’s Choice insurance policy, administered through Scottish and York Insurance (owned by Aviva Canada), on May 22, 2008.
Walker phoned President’s Choice on Aug. 12, 2008 to report the collision and to make a claim for income replacement and housekeeping and home maintenance benefits. She was then told her policy had been cancelled for non-payment of her premiums.
Scottish and York argued Walker was not entitled to the benefits because she knew or ought to have known she was driving without insurance.
Walker gave evidence she was touring the United States with her children in Drum Corps Games in the summer of 2008. She was receiving Ontario Disability Support Payments each month, and she said before she left on her U.S. tour in June 2008, she made sure there was enough money in her account to pay her bills.
While gone, she entrusted her house to her 20-year-old son.
Scottish and York testified that when it attempted to make the first premium withdrawal, the attempt was returned by the bank for insufficient funds. The insurer then prepared a notice to Walker, informing her that her policy would be cancelled as of July 15, 2008 if she didn’t submit the missed payment and insufficient funds charge prior to July 14.
Scottish and York sent the notice by registered mail, which was returned to Scottish and York on July 10. Canada Post marked the unregistered mail as “unclaimed.”
Walker said she had no knowledge of the registered mail, and that her son had not told her of any notice. Scottish and York argued, on the other hand, that she had effectively refused to be notified of the cancellation by not claiming her registered mail.
The arbitrator concluded the onus was on Scottish and York, not on Walker’s son, to ensure the notice got to Walker.
“In light of the fact that Scottish and York provided no proof that Ms. Walker knew or ought to have known that her insurance had been cancelled, I find that Walker had no reason to believe that she was driving without insurance,” Financial Services Commission of Ontario (FSCO) arbitrator Lloyd J.R. Richards wrote.