Canadian Underwriter

Dirt bike coverage dispute could reach Supreme Court of Canada

January 30, 2020   by Greg Meckbach

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If an Ontario auto client gets injured while riding a dirt bike out of province, should accident benefits be payable? Echelon General Insurance Company is trying to bring this question before Canada’s top court.

The Supreme Court of Canada announced Jan. 24 that Echelon has applied for leave to appeal a Court of Appeal for Ontario ruling against the insurer, released this past October. It arose from a coverage dispute with Christopher Perneroski, who suffered a traumatic brain injury in 2006 while riding a dirt bike in Georgia.

The ruling Echelon wants to appeal is cited as Benson v. Belair Insurance Company because the Court of Appeal for Ontario heard two appeals together.

Echelon is essentially arguing that accident benefits are not payable in Perneroski’s case because the dirt bike does not fall within any “enlarged definition” of automobile in any “relevant statute.”

Perneroski requires a wheelchair, round-the-clock care, and supervision. The parties agree that accident benefits would have been payable had the accident occurred in Ontario.

The same goes for Austin Benson, an Ontario resident insured by Belair. Benson suffered a severe brain injury in 2013, when he fell off an all-terrain vehicle in British Columbia.

Initially, Belair’s denial of Benson’s claim was upheld by an arbitrator with the Financial Services Commission of Ontario (FSCO), and also by Ontario’s divisional court. However, that ruling was overturned on appeal in Benson v. Belair. The Court of Appeal for Ontario upheld a decision by Justice Annette Casullo of the Superior Court of Justice, released Feb. 28, 2019, in favour of Perneroski.

The Supreme Court of Canada could refuse leave to hear an appeal from Echelon, in which case Justice Casullo’s ruling will stand. On the other hand, the top court could grant Echelon leave to appeal, in which case it would hear arguments from both sides and could either uphold or overturn the ruling against Echelon.

As it stands, if an off-road vehicle required insurance in Ontario, then Ontario accident benefits applies if the accident happened in a different province or in the United States. This is true even if that same vehicle does not need auto insurance in the jurisdiction in which the accident occurred.

“The interpretive stumbling block that has challenged the courts and tribunals is the wording of s. 15(1) of the Off-Road Vehicles Act,” wrote Justice Kathryn Feldman of the Court of Appeal for Ontario.

Section 15 (1) of the Off-Road Vehicles Act says: “No person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy in accordance with the Insurance Act.”

Section 224 (1) of the Insurance Act stipulates that the definition of automobile includes any “motor vehicle required under any Act to be insured under a motor vehicle liability policy.”

The requirement in Ontario to insure off-road vehicles is only enforceable in Ontario, noted Justice Feldman. “That led the Divisional Court to conclude that an off-road vehicle is only an automobile when it is being driven in Ontario,” she added.

But the Off-road Vehicles Act has the effect of including off-road vehicles as an automobile for the purpose of the Statutory Accident Benefits Schedule, which defines accident but does not define automobile.

In Ontario, off-road vehicles are generally required to have liability insurance. Some types of vehicles, including golf carts and self-propelled farming vehicles, are exempt from the Off-Road Vehicles Act. Not exempt are dune buggies and some types of ATVs.

Citing Adams v. Pineland Amusements Ltd., released in 2007 by the Court of Appeal for Ontario, Justice Feldman said there is a three-part test for determining whether a vehicle that caused damage or injury was an automobile. The first is whether the vehicle is an automobile in “ordinary parlance.” This is not the case for ATVs and dirt bikes. The second test is whether automobile is defined in the wording of the insurance policy. If the policy does not define automobile, then the third test is whether the vehicle falls “within any enlarged definition of automobile in a relevant statute.”