When an Ontario woman was catastrophically injured in an accident in a Nunavut-plated vehicle in Nunavut, that vehicle’s insurer was initially told it had to pay Ontario accident benefits to the claimant.
But in Travelers Insurance Company of Canada v. CAA Insurance Company released June 15, the Court of Appeal for Ontario ruled that it is CAA — which insured the claimant’s Ontario vehicle — that must pay Ontario accident benefits.
Patricia Soloway was temporarily working as a nursing supervisor when she was injured in a motor vehicle accident in Nunavut. The Nunavut-plated vehicle she was driving was insured by Travelers Canada. She applied for Ontario accident benefits with CAA, which used Ontario’s pay-first-dispute-later process to seek reimbursement from Travelers. CAA reasoned that Travelers should pay because the claimant is an Ontario resident, Travelers is an Ontario auto insurer and Travelers is a signatory to Power of Attorney and Undertaking (PUA).
The PAU is an agreement among Canadian auto insurers, as well as some American insurers, to assist motorists who travel outside their province or state of residence, the Supreme Court of Canada noted in its 2003 ruling in Unifund Assurance Co. v. Insurance Corp. of British Columbia. In the PAU those insurers agree to comply with “minimum coverage requirements.”
In the case involving Soloway’s accident in Nunavut, an arbitrator ruled in favour of CAA, a decision upheld by Justice Andra Pollak of the Ontario Superior Court of Justice in a ruling released Sept. 13, 2018.
But in its unanimous decision allowing Travelers’ appeal, the Court of Appeal for Ontario said that the presence of an office in Ontario does not in itself make Ontario’s Insurance Act the governing legislation for all auto insurance policies that insurer underwrites.
“Like Travelers, many of Canada’s car insurers are licensed to write car insurance here and elsewhere in Canada,” wrote Justice Peter Lauwers for the Court of Appeal for Ontario. “Treating mere Ontario licensing as the sole reason to constitute an insurer as an ‘Ontario insurer’ would give Ontario insurance legislation extraterritorial effect.”
Part VI of Ontario’s Insurance Act — which governs auto insurance — “does not apply to a contract providing insurance in respect of an automobile not required to be registered under the Highway Traffic Act unless it is insured under a contract evidenced by a form of policy approved under this Part,” according to section 226 (2) of the Insurance Act.
Therefore, an insurance policy cannot both be governed by Ontario and Nunavut law at the same time, Justice Lauwers wrote.
He added that despite Ontario’s pay-first-dispute-later system, the priority rules for accident benefits disputes only apply if both insurers are subject to those rules.
So in ruling against Travelers, both the arbitrator and the appeal judge erroneously treated Travelers as an Ontario insurer and the policy Travelers issued in Nunavut policy as an Ontario policy.
“Under Nunavut law, the claimant was only entitled to Nunavut statutory accident benefits. As noted, if the claimant had been driving the Nunavut vehicle in Ontario at the time of the accident, the PAU would have obliged Travelers to pay statutory accident benefits at the Ontario rate and not the Nunavut rate, but that is not what happened here,” wrote Justice Lauwers.