Insurer must defend where insured reasonably believed driver held valid licence.
The insured applied for a declaration that his automobile insurer owed him a defence and indemnity after denying coverage on the basis that he permitted an unauthorized driver to operate his vehicle contrary to statutory condition 4(1) under O. Reg. 777/93 and the Ontario Automobile Policy.
The driver, the insured’s girlfriend, possessed only a G1 licence and was involved in a collision while driving alone on a 400‑series highway.
The court held that the proper test was whether the insured took reasonable and prudent precautions to ensure the statutory condition was not contravened.
Given that the insured had seen the driver produce a licence for identification and had previously ridden with her while she drove, and given the visual similarity between G1 and full licences, the insured acted reasonably and was not wilfully blind.
The insurer therefore remained obligated to provide defence and indemnity.
SCJSuperior Court of JusticeMar 24, 2014