Why you should name all of the insured drivers in your household

In Ontario and most other provinces across Canada – all motorists are required to have auto insurance and this is the law. You cannot drive a motorized vehicle on public roads without insurance and there are good reasons for this.  This is not just about following the law. If you are involved in an auto accident, your insurance carrier will provide you with certain statutory accident benefits. Furthermore, if another driver’s negligence caused the accident, their insurance carrier would be responsible for paying any damages arising from a personal injury claim.

Case Study: Seetaram v. Allstate Insurance Company of Canada

Ontario insurance companies are quick to disclaim coverage if they believe the insured party has not followed the rules governing the policy. For example, if a person applying for auto insurance “misrepresents or fails to disclose” a material fact requested in the application, any subsequent claim filed under the policy is “invalid,” according to the Ontario Insurance Act. It does not necessarily matter if the misrepresentation or omission was intentional. In other words, even if you never intended to lie–or you simply misunderstood the question on your insurance application–the insurer can still potentially “void” your coverage.

In fact, an Ontario Superior Court justice recently addressed this very subject. This case, Seetaram v. Allstate Insurance Company of Canada, arises from an April 2013 car accident. The Court’s opinion did not offer specific details of the accident itself, although apparently it was a collision between a car and a motorcycle. About two months later, lawyers representing the motorcyclist sent notice to the owner and driver of the car. The lawyers said their client planned to file a personal injury lawsuit, and as such they requested the appropriate insurance information from the owner and driver.

The Disputed Insurance Policy

The driver was actually the son of the owner. The father previously purchased an Ontario auto insurance policy from Allstate, who is the respondent in this case. The initial purchase took place in April 2012. At that time, the son was “learning to drive at driving school,” according to court records, and he held a G1 license from the Ontario Ministry of Transportation. However, the father did not list his son as a “named insured” on the Allstate policy; only he and his wife were listed. The parents later testified in court that they assumed, incorrectly, that their “full coverage” policy automatically covered anyone living in their household.

In early 2013, the son received his G2 license. Two months later–and one day before the accident–the parents renewed their Allstate policy. Once again, they did not list their son as a named insured, even though the renewal offer sent by Allstate directly asked the question, “Are any other persons in the household or business licensed to drive?”

After the accident, Allstate conducted an investigation. The father admitted his son was driving his car at the time. The father also reiterated he believed that the “full coverage” of his Allstate policy automatically covered his son as a member of the father’s household.

In his own statement, the son admitted that he “hit a biker”–i.e., the motorcyclist–and that his G2 license was suspended sometime thereafter. The son further acknowledged he “drove away” from the accident scene before he was detained by law enforcement. The son also told Allstate that he was driving alone at the time.

Based on this information, Allstate sent the parents written notice that their auto insurance policy was “void” as of the original 2013 purchase date. As such, the insurer would not pay for any damages resulting from the motorcyclist’s personal injury lawsuit. The parents and their son then filed an application with the Superior Court, asking for an order to declare the insurance policy was valid.

The Judge’s Decision

In a decision issued on January 25, 2019, Justice Benjamin T. Glustein dismissed the application. The judge did not directly address whether the parents’ insurance policy was void from the original purchase date, as Allstate maintained. Rather, the court focused on the 2014 renewal of the policy.

Justice Glustein explained that the standard Ontario Automotive Policy used by Allstate required policyholders to inform the insurer “of any change that might increase the risk of an incident or affect our willingness to insure you at current rates.” This includes adding drivers to the policy, as that can directly affect the premiums charged.

On this point, Allstate said the parents paid a stated premium of $2,112 for their insurance policy. But if Allstate had known a 17-year-old driver with a G2 license was also a named insured, that premium would have nearly doubled, to $3,954. From Allstate’s perspective, the son “was in a high-risk insurance category,” a fact belied by the accident.

As for the parents testimony that they did not know they needed to list their son, Justice Glustein held that was of no relevance. As noted above, the insurance policy contained clear language informing the parents of their duty to inform Allstate they were adding a driver. The parents should have read and understood their obligations. Even if they did not, ignorance is still no excuse. “An applicant for insurance cannot escape the effect of a misrepresentation in an application for insurance by stating, or proving, that he or she did not read the document before signing it,” Justice Glustein said.

Consequently, the parents have no insurance coverage to protect them from the potential damages a court may later award the motorcyclist. Justice Glustein also ordered the parents to pay $15,000 in costs to Allstate.

Speak With Our Motor Vehicle Accident Lawyers For A Free Consultation

Although the Court’s ruling in this case was understandable, it also puts the accident victim in an unfortunate position. After all, victims often rely on insurance coverage to receive compensation, as many drivers lack the financial resources to personally satisfy a substantial judgment.

Dealing with insurance companies is just one of many subjects with which an Ontario personal injury lawyer may be able to assist following a car accident. Call the Preszler Injury Lawyers to schedule a free, no-obligation consultation with one of our lawyers today. You can book a free consultation with our legal team using our website online booking form, live chat agent, text,  phone or email. Remember, you don’t pay unless we win and this consultation is a free no-obligation consultation.