Insurance law - Liability insurance - Motor vehicle accidents - Multiple policies - Apportionment and contribution - Policies and insurance contracts - Notice - Limitation of actions - Rights and duties of insurer; Mediation - Statutory provisions

July 2008

Echelon General Insurance Co. v. CGU Insurance Co. of Canada

[2008] O.J. No. 2224

Ontario Superior Court of Justice

T.P. Herman J.

June 5, 2008

The claimant was involved in a cycling incident and suffered injuries for which he claimed accident benefits from the First Insurer.  The First Insurer had insured the defendant motorist's vehicle.  The claimant was a dependent of his father who was insured by the Second Insurer at the time of the accident. The First Insurer did not give notice to the Second Insurer, within the required 90 days of receipt of the claim for benefits, that it was disputing its obligation to pay statutory accident benefits to the claimant. 

At an arbitration, the First Insurer took the position that the Second Insurer was responsible for the payment of benefits to the injured claimant under the policy of insurance issued to the claimant's father.  The arbitrator refused to extend the 90-day notice period, finding accordingly that the First Insurer was responsible for payment of benefits.  On appeal, the First Insurer argued that the Arbitrator incorrectly concluded that it should have contacted the Second Insurer or the Second Insurer's agent prior to the end of the 90-day period to find out whether the father of the claimant had an insurance policy.  The First Insurer also argued that the arbitrator was incorrect in concluding that had the First Insurer followed up it "may well have determined" that the claimant was covered by the Second Insurer's policy.

The court concluded that the failure of the First Insurer to follow up with the Second Insurer after receiving notice of the claim for benefits was not reasonable.  The language of section 3(2)(b) of the Ontario Mediation Regulation provides that the Insurer must carry out its investigations fully and expeditiously.  This section focuses on the issue of whether the Insurer made "reasonable" investigations, not whether those investigations resulted in a correct determination of the availability of other insurance. 

The court held that the arbitrator was not in error when he found that an inquiry by the First Insurer might have resulted in it finding out about the Second Insurer's policy, nor was the arbitrator in error in concluding that the First Insurer should have made such an inquiry.  There was evidence before the arbitrator that the First Insurer had reason to question the representations of the claimant to the effect that there was no other insurance available, and, in these circumstances, it would have been reasonable for the First Insurer to conduct further investigations into the matter.

This case was digested by Shanti Davies  of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact her directly at sdavies@harpergrey.com or 604.895.2877