Canadian Underwriter

How off-road vehicles impact commercial liability risk

November 1, 2018   by Greg Meckbach

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Commercial clients who allow off-road vehicles to be driven on their property could have insurance coverage gaps, a commercial lawyer warns.

In Ontario, off-road vehicles are generally required to have liability insurance, but some types of machinery – such as golf carts and self-propelled farming vehicles – are exempt.

So vehicle owners who get sued because they cause accidents could have no insurance coverage, said Chet Wydrzynski, associate with insurance defence law firm Dolden Wallace Folick.

It is more likely that there will be coverage gaps for consumers because many homeowner policies exclude use and operation of a vehicle. By contrast, commercial property policies tend to be more “all encompassing,” Wydrzynski said in an interview.

But say your client operates a recreational park with a racecourse where visitors may bring dirt bikes or other off-road vehicles. Suppose a visitor is speeding, causes an accident and injures someone. The injured person could sue both the driver and the owner of the property, Wydrzynski said.

In certain scenarios, under joint and several liability laws, a commercial property owner could be found 10% liable and the driver found 90% liable. But if the recreational vehicle has no insurance, “the racecourse owner may possibly have to pay the whole amount” that a court awards to a victim, Wydrzynski said.

One private property where golf carts are used is a residential complex in the Toronto neighbourhood of Scarborough, said Tim Vale, a tenant in that complex. Vale said in an interview he has observed golf carts driven on sidewalks by property maintenance staff. His residential complex includes dozens of three-storey buildings and private roadways. Vale told Canadian Underwriter he is concerned there may be an accident if a golf cart hits someone.

“If something that is almost 1,000 pounds hits a 95-pound child, or even an adult, that’s going to do some serious damage,” Vale said. “It says in our lease that if we are hit or killed by any of [the property manager’s] equipment, they are not responsible. I am like, ‘Yeah, right, you can put anything you want in the lease: if you hit me with a motor vehicle, I have a right to sue your ass.’ It doesn’t make a difference where it happens.”

Ontario’s Highway Traffic Act excludes several types of vehicles – including power-assisted bicycles, motorized snow vehicle and tractors – from the definition of motor vehicle.

The Off-Road Vehicles Act applies to some vehicles which are propelled by something other than a human or the wind. It includes both vehicles which have three wheels or less, or which have more than three wheels and are listed as “prescribed” in Ontario Regulation 863.

Whether or not a vehicle requires insurance has been debated in court.

Arthur Matheson, who operates a farm near Ottawa, took Perth-based Lanark Mutual Insurance Company to court after he was injured in 2008.

Matheson was rear-ended while driving his Honda TRX 200 ATV on a public highway from one part of his farm to another. He did not have auto insurance on that ATV but made an accident benefits claim with Lanark, which insured Matheson’s personal vehicle.

Lanark argued Matheson’s accident benefits claim was barred because he was driving an uninsured vehicle.

Matheson argued his ATV did not require auto insurance. Matheson argued the ATV should be considered a “self-propelled implement of husbandry” which the Highway Traffic Act excludes from the definition of vehicle.

Matheson was initially successful. In Matheson et al, v. Lanark Mutual Insurance Company, released in 2013 by the Ontario Superior Court of Justice, Judge Kenneth Pedlar ruled that a reasonable person would agree that Matheson’s ATV was a farming vehicle.

Lanark Mutual was success on appeal.

Ontario Regulation 863 specifically states that the Honda TRX 200 is an off-road vehicle and not “a self-propelled implement of husbandry,” wrote Judge Russell Juriansz of the Court of Appeal for Ontario in his ruling released in 2014.

Matheson’s ATV may have been a vehicle used in farming but it was not “manufactured or designed for a specific use in farming,” added Juriansz. “Not all vehicles used in farming are excluded from Ontario’s compulsory insurance regime.”