Case Study: Car Accident Claims Without Insurance
When you are injured by a negligent driver in a motor vehicle accident, you may be entitled to seek compensation from a number of sources. Obviously, you can file a personal injury claim to recover damages against the negligent driver. You can also pursue a claim with your own insurer under Ontario’s Statutory Accident Benefits Schedule.
But what happens if you are involved in an auto accident without insurance? More to the point, what if neither you nor the negligent driver has insurance? For example, what if you are not insured because you are a university student who does not own a car, and you are in a hit-and-run accident in which the negligent driver is never identified?
In that scenario you can seek benefits from the Ontario Motor Vehicle Accident Claims Fund (MVACF). The MVACF is a “payer of last resort” that provides compensation when no other insurance coverage is available.
Of course, if the negligent driver is eventually identified–or is already known but later found to have applicable insurance coverage–the MVACF may pursue a claim to recover any money already paid out to the victims.
Ontario (Finance) v. Traders General Insurance: Was a Car Owner’s Insurance Policy in Effect During Deadly Accident?
For example, the Ontario Minister of Finance, acting as the legal representative of the MVACF, recently concluded a recovery proceeding that originated in a car accident that took place nearly 17 years ago. The legal dispute arose between the Minister and an insurance company that claimed there was no active policy in force on the date of the subject accident.
As it turned out, the policy was in force, as the insurer did not comply with the legal requirements for cancellation.
The accident itself occurred on November 20, 2001. A 1991 Hyundai crashed after the driver lost control of the vehicle. The driver was killed in the impact. One of the passengers sustained a serious injury. A second passenger was the son of the man who actually owned the car. The son had given the driver permission to operate the car that night.
Two years before the accident, the owner’s wife had contacted an auto insurance company–the defendant in this case–and purchased a policy to cover two vehicles, including the Hyundai. Of critical note here, the husband was the registered owner for both vehicles, even though the insurance company issued the policy in the wife’s name.
Moving ahead to September 2001, two months before the accident, the insurance company sent the wife a notice purporting to cancel the policy after an automatic debit to pay the monthly premium failed. The wife apparently never told her husband about the notice. From the insurance company’s view, the policy was therefore no longer in effect on the date of the accident.
Coverage Claims and Litigation
In December 2001, the MVACF awarded statutory accident benefits of nearly $1.7 million to the seriously injured passenger. Several months later, in June 2002, the Fund resolved a personal injury claim on the passenger’s behalf with the owner of the car and the driver’s estate for about $235,000.
The passenger “assigned” this judgment to the Fund, transferring his right to collect on the judgment to the MVACF. This allowed the Fund to pay the money directly to the victim, while in turn reserving the Fund’s right to seek reimbursement from the personal injury defendants or their insurers.
The Fund only managed to recover $47,500 directly from the owner of the Hyundai. It was not until 2008 that the Fund took action against the owner’s insurance company. Before the courts, the Fund argued the September 2001 policy cancellation was improper, and therefore the insurer was still liable for damages arising from the November 2001 accident.
Not an Accident Without Insurance After All: Insurer Ordered to Repay MVACF $235,000
Basically, this case came down to the insurance company’s records, or lack thereof, regarding the circumstances of the policy’s initial purchase.
The wife testified that when she initially spoke to the insurance company’s representative, she was not asked to identify the owner of the insured vehicles. Nor did the insurance company ask her to fill out a written application confirming vehicle ownership.
This is important because the Ontario Insurance Act expressly requires insurers to provide and use written application forms. At trial, the insurer could not provide any evidence that such a form existed. Instead, the insurer maintained the wife “misrepresented” the true ownership of the vehicles.
The trial judge did not accept this argument. Again, the law imposes a duty on the insurer to “obtain written information” regarding a vehicle’s ownership. The judge found the insurer could not ignore this obligation and then blame the customer.
Why does that matter? Because according to the law, the husband was the “insured” party under the policy, not his wife, as he was the owner of the vehicles. Just as the Insurance Act requires written application forms to confirm vehicle ownership, it also states that insurers may not cancel a policy unless it gives written notice to the “insured” at least 15 days in advance.
Since the insurer only sent notice to the wife, the cancellation was invalid.
Accordingly, the trial court ordered the insurer to reimburse the MVACF for the full amount of the $235,000 personal-injury judgment previously obtained against the car owner. The insurance company appealed.
In a June 21, 2018, judgment, the Ontario Court of Appeal dismissed that appeal. The Court of Appeal noted the Fund was entitled to recovery based on the “unjust enrichment” of the insurance company.
In other words, the Fund was wrongly deprived of money due to the insurer’s failure to promptly pay the personal injury claim arising from the accident involving the insured owner’s vehicle.
Do Not Face the Insurance Companies Alone: Call Preszler Injury Lawyers
If you are seriously injured in a car, truck or motorcycle accident, the last thing you want to worry about is haggling with an insurance company. That is why you should contact an Ontario personal injury lawyer who may be able to seek compensation from the responsible parties on your behalf.
At Preszler Injury Lawyers, we exclusively represent accident victims. Call us today to schedule a free, no-obligation consultation with one of our auto accident lawyers.