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Insurer needed to inquire immediately in order to gain extension beyond 90-days


June 10, 2008   by Canadian Underwriter


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An insurer must be prepared to show it has left no stone unturned in following up with an inquiry, regardless of where that inquiry might lead, if it wants to extend its 90-day period to dispute priority to pay accident benefits, Ontario’s Superior Court has found.
The court thus upheld an arbitrator’s decision that found against Echelon in the matter of Echelon General Insurance Company v. CGU Insurance Company of Canada.
The matter concerns Anthony Gibbs Jr., who was involved in a cycling accident on May 11, 2002. He was struck by a motor vehicle that was ensured by Echelon.
Gibbs applied to Echelon for accident benefits and Echelon has been paying him statutory accident benefits.
Echelon took the position that CGU is responsible for the payment of benefits to the claimant. After the 90-day period was over, Echelon found that Gibbs was the dependent of his father, Renford Anthony Gibbs Sr., who was insured by CGU at the time of the accident.
Echelon did not give CGU notice that it disputed priority to pay accident benefits until after the expiry of the 90-day notice period.
Echelon received Gibbs’ application for accident benefits on July 24, 2002. In answer to the question of whether Gibbs was covered by “the policy of any person on whom you are dependent (e.g. a parent),” Gibbs put an “X” in the “No” box.
Echelon’s adjuster spent a considerable amount of time after the accident trying to ascertain Gibbs’ insurer. After repeated inquiries, Echelon finally received a letter from Gibbs’ legal representative on Oct. 7, 2002 10 days before the 90-day period to file a dispute with an insurer’s priority.
The lawyer’s letter confirmed Gibbs’ insurer as CGU, the agent as Timmerman Insurance, and presented a CGU policy number different than that discovered by Echelon in an earlier search.
Echelon did not follow up on this information until after the 90-day period was over. The arbitrator found Echelon should have tried to contact CGU or Timmerman during the 10-day period after it received the information.
Echelon argued that even if it had contacted Timmerman prior to the 90-day expiry period was over, it might not necessarily have discovered the information it needed to identify the correct CGU policy number (there were two).
The Superior Court found it didn’t matter what the result of the further investigation would have or might have been. The point was that Echelon should have made the inquiry immediately in order to prove that it needed more than the 90-day period to find its answer.