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Insurers lose appeals in transfer-of-loss case


August 29, 2008   by Canadian Underwriter


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Two insurers, Royal & SunAlliance (now RSA) and Aviva Insurance Company of Canada, have lost their appeals from an arbitration under the loss transfer provisions of s. 275 of the Ontario Insurance Act.
The arbitration arose from an incident occurring early in the morning at an Ontario gas bar located on County Road 46, just north of Highway 401.
Tim Wry, 17, a gas station attendant on his first week of the job, was finishing his night shift at the Cango Gas Station.
A fuel truck owned by Cango Transport Inc., insured by Royal, had just finished delivering fuel and needed to exit the station. To do so, it had to back up onto County Road 46. The driver asked Wry to help him.
Wearing black, Wry made his way onto the southbound lanes of the road, where he was struck by a car. As he lay injured, he was struck by another car. He suffered personal injuries and applied for accident benefits.
An arbitrator found Wry was 50% at fault for the accident and the two drivers who struck him had no liability at all. The operator of the Cango tractor-trailer insured by Royal was 30% responsible for the accident, while Cango Inc, the owner of the gas station and Wry’s employer, was held 20% responsible.
The arbitrator found Royal was responsible under the loss transfer provisions of the Insurance Act to pay Aviva for 30% of Wry’s benefits.
Aviva appealed the arbitrator’s ruling. It argued the gas station could not be found 20% responsible, since, it argued, under the loss transfer provisions, fault could only be allocated among insurers providing automobile insurance in relation to the accident.
The Ontario Superior Court rejected the appeal, citing Jevco Insurance Company v. York Fire Casualty Company, in which the Ontario Court of Appeal held that under the Fault Determination Rules, fault is “intended to refer to the degree of responsibility for the accident itself.”
Royal appealed on several grounds. Among them, it argued the operator of the truck should not have been assigned any fault, since the two cars hit Wry and the Royal-insured truck itself was not “involved” in the incident.
The Superior Court rejected Royal’s appeal in its entirety, citing a previous arbitration ruling. In it, an arbitrator “correctly held that ‘involved in the incident’ is broader than the term ‘in collision with,’ which would require contact between the vehicle in question and another vehicle.”


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