Client loses lawsuit arising from automatic policy renewal
January 31, 2019 by Greg Meckbach
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A motorcyclist who tried to sue his insurer for renewing his policy and deducting money from his account will not have his case heard before the Supreme Court of Canada.
The top court announced Jan. 31 it has turned down an application from Oliver Bajor to hear an appeal of an Ontario court ruling in favour of TD Meloche Monnex.
Bajor was paying his premium through pre-authorized debit. He unsuccessfully sued TD Meloche Monnex, which started insuring Bajor’s motorcycle in February 2012. TD renewed Bajor’s insurance in February 2013 and again in February 2014.
TD obtained $226.16 from Bajor’s bank account in an automated withdrawal on Mar. 10 2014. In the middle of March, Bajor called the insurer and cancelled his policy. TD returned the $226.16 to Bajor on Mar. 27, 2014.
But Bajor took TD to court, asking for an award of $25,000. Bajor essentially argued that TD should not have withdrawn the money in the first place because Bajor had not explicitly agreed to renew the policy.
A Small Claims Court judge disagreed. That ruling was upheld by Divisional Court in 2017. The Court of Appeal for Ontario denied leave to appeal, so Bajor applied in 2018 for leave to appeal to the Supreme Court of Canada.
The “accepted practice in Ontario,” which is intended to protect the client, is to keep an insurance policy in force until it is cancelled, Judge Elizabeth Stewart of Divisional Court wrote in Bajor v. TD Meloche Monnex, released April 12, 2017.
“Such cancellation must be clear, unconditional and unequivocal,” added Judge Stewart, citing Bolton Estate v. Allstate Insurance Co. of Canada released by Ontario Court General Division in 1995.
Judge Stewart ordered Bajor to reimburse TD nearly $1,900 in legal fees.
TD sent Bajor a policy renewal package in December, 2013, Stewart noted. TD told Bajor his policy would be automatically renewed Feb. 9. 2014. Included in the package was a cancellation request form, which TD did not receive from Bajor.
“In January and February 2014, Bajor sent emails to [Meloche Monnex] concerning some pricing and renewal concerns,” judge Stewart wrote.
The insurer “responded by providing Bajor with details of his coverage.”
The 1995 decision Bolton Estate v. Allstate arose 1994 after a life insurance client died Aug. 19, 1994 in an airplane accident. Four days earlier, premiums were deducted from the client’s account, at which point the customer prepared a letter requesting the policy by cancelled. The letter was mailed the day before the client died. The court ruled the policy was in effect until Sept. 15, 1994. Although the Aug. 15 letter made clear that the policy was to be cancelled at some point in the future, it was “not a clear, unconditional and unequivocal offer to cancel the policy effective August 15, 1994.”
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In the Ontario Automobile Policy (OAP 1) Owner’s Policy, in booklet form, under “Statutory Conditions,” 3 pages are devoted to detailing requirements for termination of the policy by the insurer while termination by the insured is referenced by one line, “This contract may be terminated by the insured at any time on request.” It is clear that Bajor did not follow the statutory requirements of his auto policy by telling the insurer not to renew his policy. Even if he had, the Policy booklet fails to inform him that a cancellation or termination request must be “clear, unconditional and unequivocal” to quote Judge Stewart.
Be that as it may, it may be more than likely that Bajor did not have a Policy booklet to refer to. Ontario auto policies are renewed on the basis of documentation giving the insured ‘declaration pages’ of coverage, limits and amounts. The policy booklet is not included with the renewal, usually only at the time the policy is first written.
Which is unusual to say the least; a Commercial/business policy will be renewed with over 90 pages of wordings each and every time yet the auto policy is renewed without a Policy booklet of a size that that can be stuffed in a jacket pocket.
I don’t disagree with Judge Stewart’s point that to protect the public, a policy is kept in force until it is cancelled but if that’s the accepted practice, why isn’t this same protection applied to renewing auto policies with the Policy booklet so insured’s will know what to do. Insured’s may not read wordings, as is the usual plaint, but it would reaffirm to a insured what he contractually failed to do.
It probably wouldn’t hurt for the Statutory Conditions to be revised to spell out the form a termination request must take when an insured no longer wants the policy.
I changed insurance company over a year ago and today I received an auto renew for the company I cancelled with along with my current insurance company. Now I have 2 auto renewals to deal with, and why should I be put in that position. Is that legal for an insurance company to send auto renews to customers they lost over a year ago
The automatic renewal of a life insurance policy at 10 times the monthly amount previously withdrawn from the bank account appears to be another form of “negative billing” which I thought had been gotten rid of a long time ago in Canada.