Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 107

Appeal P96-000012

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Appellant

and

SIMCOE & ERIE GENERAL INSURANCE COMPANY

Respondent

and

DAVID BROWN

Respondent

Before:

Susan Naylor, Director's Delegate

Counsel:

Jim M. Flaherty (for State Farm)

Ralph D'Angelo (for Simcoe & Erie)

Elizabeth Pacheco (for David Brown)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is dismissed and the arbitrator's order dated October 10, 1995 is confirmed.

June 19, 1997

Susan Naylor

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This case concerns which of two insurers - State Farm Mutual Automobile Insurance Company ("State Farm") or Simcoe & Erie General Insurance Company ("Simcoe & Erie") - is liable to pay accident benefits to David Brown. The central issue relates to accident benefit coverage in respect of a vehicle driven as a taxicab at the time of the accident. Mr. Brown's accident occurred on March 30, 1994. His case therefore concerns the interpretation of, and interaction between, the Insurance Act, R.S.O. 1990, c. I-8, as amended by the Insurance Statute Law Amendment Act, 1993, S.O. 1993, c. 10, the Statutory Accident Benefits Schedule - Accidents on or after January 1, 1994, O. Reg. 776/93 and the Ontario Automobile Policy Form No. 1 - Owner's Policy (O.P. F. No. 1), approved for use on or after January 1, 1994.¹ For ease of reference, I shall refer to these respectively as the Act, the 1994 Schedule and the "Owner's Policy" or "the policy". Mr. Brown did not take a position on which insurance company should pay his benefits.

This appeal was heard in conjunction with the appeal in Movahedi and State Farm Mutual Automobile Insurance Company, Movahedi and Royal Insurance Company of Canada, (June 13, 1995, OIC A-006901 and A-008245). That case involved similar facts, but different statutory provisions applied because the accident occurred before January 1, 1994. In reaching her conclusion in this case, the arbitrator relied on Movahedi. I agreed with the decision in Movahedi for reasons issued concurrently with the reasons given here.

The facts are not in dispute. Mr. Brown was injured while driving a taxicab.² The taxi-cab was leased by Swops Taxi Limited to a third party. It was insured under a master fleet policy of automobile insurance issued by Simcoe & Erie to Able Atlantic Taxi Ltd. Mr. Brown was not listed as an insured under the policy. Mr. Brown owned a vehicle for his personal use and insured it with State Farm. He was listed on that certificate of insurance.

Both the fleet policy and the personal vehicle policy are in the standard form of owner's policy (O.P.F. No. 1), approved by the Commissioner of Insurance under legislative authority. The fleet policy had a number of approved riders and endorsements attached to it, including O.E.F. 6A, "Permission to carry passengers for compensation endorsement", authorising the operation of the vehicle as a taxicab.

No-one disputed that vehicles operated as taxicabs attract a higher premium than private passenger vehicles.³ Taxis are rated separately under the classification system because they involve substantially higher risk.⁴ It was accepted that the risk of exposure to payment of first party benefits is also higher, and that this is factored into the premium setting.

The arbitrator concluded that Mr. Brown must claim benefits from the insurer of his private passenger vehicle - which did not insure the risk of his driving a taxi - even though the accident involved a taxicab insured by Simcoe & Erie. This seems to fly in the face of fundamental insurance principles related to assessing risk and setting premiums. Understandably, that is the focus of State Farm's objection to the decision. Notwithstanding this, however, I find that the decision is correct for the reasons that follow. I considered somewhat similar arguments in Royal Insurance Company of Canada and Markel Insurance Company of Canada and Portch, (December 17, 1997, P-008360 and P-007701) ("Portch") which was issued after the appeal in this case was heard.

II. THE LEGISLATION

The enhanced no-fault benefit scheme enacted in 1990 changed the rules for determining which insurance company must pay accident benefits in any given situation and to whom. The changes expanded the class of persons who could recover accident benefits under a particular automobile insurance policy and made provision for overlapping coverage under more than one policy. The legislation set out rules determining the order in which insurers must pay benefits where more than one insurer is involved. The previous legislative scheme made the insurer of the vehicle involved in the accident primarily responsible. The 1990 legislative amendments changed this approach. They required a person to look to their own insurance policy before seeking recourse under the policy of the owner of the vehicle in which they were an occupant or which struck them. This represented a very significant change, and one that was maintained in the 1993 amendments.

The relevant part of section 268(2) of the Act states:

The following rules apply for determining who is liable to pay statutory accident benefits:

1. In respect of an occupant of an automobile,

i. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,

ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant,

iii. if recovery is unavailable under subparagraph i or ii, the occupant has recourse against the insurer of any other automobile involved in the incident from which the

iv. entitlement to statutory accident benefits arose, If recovery is unavailable under subparagraph i, ii or iii, the occupant has recourse against the Motor Vehicle Accident Claims Fund

(Emphasis added)

Subsections 268(4) to 268(5.2), in general terms, provide that, if someone is an insured under more than one policy but is a named insured under only one of these, he or she must claim against that insurer.⁵ If the insured is a named insured under more than one policy, and was an occupant of an automobile in respect of which he or she is a named insured, he or she must claim benefits against that insurer.⁶ Otherwise the person may chose which insurer to claim against.⁷The added complication in this case is that the State Farm policy lists Mr. Brown as a named insured, but the Simcoe & Erie policy does not.

State Farm argues that Mr. Brown is not an insured under its policy in respect of the accident because the policy expressly excludes him while he is driving a taxicab. Therefore, his only recourse is against Simcoe & Erie, the insurer of the vehicle he was driving at the time of the accident.

The provisions in s.268(2) come into play once coverage has been established under a particular motor vehicle liability policy.⁸ The content of accident benefits coverage is specifically legislated. Entitlement to accident benefits is determined, in this case, by the rules set out in the 1994 Schedule, which is a regulation authorised under subsection 121(1) 9 of the Act. Section 268(1) of the Act incorporates the terms of the 1994 Schedule into every motor vehicle liability policy. It states:

Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.

Paragraph 2.1 of the policy reproduces section 268(1).

Section 1 of the 1994 Schedule identifies the people who are insured under a particular policy of automobile insurance and so entitled to claim statutory accident benefits from that insurer, subject to the priority rules. It states, in part:

In this Regulation,

"insured person", in respect of a particular motor vehicle liability policy, means,

(a) the named insured, any person specified in the policy as a driver of the insured automobile, the spouse of the named insured, and any dependant of the named insured or spouse, if the named insured, specified driver, spouse or dependant,

(i) is involved in an accident in or outside of Ontario that involves the insured automobile or another automobile....

(b) in respect of accidents in Ontario, a person who is involved in an accident involving the insured automobile,...

(Emphasis added)

"Insured automobile" is defined in the same section as follows:

"insured automobile", in respect of a particular motor vehicle liability policy, means any automobile covered by the policy;

(Emphasis added)

III. IS MR. BROWN AN INSURED PERSON UNDER THE STATE FARM POLICY?

State Farm argues that Mr. Brown is not an insured person in respect of the policy that insured his personal vehicle. It relies on the provisions in the policy, which extend coverage to automobiles other than the vehicle described in the policy, but exempt vehicles used for certain commercial purposes. It also relies on a specific exclusion in the policy excluding liability if the automobile is being used as a taxicab.

The exclusions that State Farm relies on are contained in the standard Owner's Policy. Although the underlying basis of the relationship between an insured and an insurer is contractual, the form and content of automobile insurance contracts are strictly regulated. The form of motor vehicle liability policies must be approved by the Commissioner of Insurance, by statutory requirement.⁹

Part B of the policy deals specifically with statutory accident benefits. It defines "insured person" in subsection 2.4 as follows:

"insured person" in respect of this policy, means an "insured person" as defined under the Statutory Accident Benefits Schedule and includes any person who suffers injuries as a result of an accident involving the automobile who has no recourse against any other insurer under a contract evidenced by a motor vehicle liability Policy in respect of which the person is a named insured or the spouse or dependant of a named insured; or against the insurer of the automobile in which the person was an occupant or which struck the person.

Mr. Brown would seem to fit within the definition of "insured person" under section 1 of the Schedule and subsection 2.4 of the policy. Although he was not driving the insured automobile - an automobile covered by the State Farm policy - he was driving "another automobile"- the taxicab. State Farm argues that it is not liable to meet Mr. Brown's claim under the policy because the vehicle he was operating was being used as a taxicab. It argues that he is thereby excluded from recovering under the policy by the terms of paragraph 5.2.2. (d)(vi) and 5.12(c) of the policy. State Farm argues that these exclusions recognise the different risks involved in driving a taxicab and carve these additional risks out of the standard Owner's Policy.

The relevant provisions are contained in Part E - General Provisions, Definitions and Exclusions. The relevant paragraphs of section 5.2.2 of the policy state, under the heading "automobile defined":

"the automobile" except where otherwise stated, means: for the purposes of Parts A (Third Part Liability), B (Statutory Accident Benefits) C (Loss or Damage to Insured Automobile, and D (Uninsured Automobile Coverage):

(a) the described automobile: an automobile or trailer described in this Policy;

(b) a newly acquired automobile:...

and for the purposes of Parts A (Third Part Liability), B (Statutory Accident Benefits) and D (Uninsured Automobile Coverage):

(c) a temporary substitute automobile:....

(d) any other automobile: other than the described automobile, which is of a gross vehicle weight of 4,500 kilograms or less, while personally driven by the insured or by his or her spouse if residing in the same dwelling premises as the insured, provided that

(i) the described automobile is of a gross vehicle weight of 4,500 kilograms or less;

(ii) the insured is an individual or are spouses of each other;

(vi) the other automobile is not used for carrying passengers for compensation or hire or for commercial delivery at the time of the loss;

(emphasis added)

There is little doubt that these provisions are intended to apply to accident benefit coverage. Part E of the policy is stated to specifically apply to "every part of this policy" except where stated. To reinforce this, Part B expressly provides that it should be read subject to the provisions in Part E, sections 5.1 to 5.12. Paragraph 5.2.2 (d), is expressly stated to relate to accident benefits under Part B of the policy as well as to third party coverage under Part A and uninsured automobile coverage under Part D, subject to the exceptions set out. Unlike paragraph 5.2.2(d) (iv) or (v), paragraph 5.2.2(d)(vi) is not qualified by the words "except for the purposes of Part B (Statutory Accident Benefits)".

In addition, State Farm points to a specific exclusion in relation to taxicabs. Section 5.12 states, in part, under the heading "excluded uses":

The insurer shall not be liable while,

(c) the automobile is used as a taxicab, public omnibus, livery, jitney or sightseeing conveyance or for carrying passengers for compensation or hire; provided that the following uses of the automobile by the insured shall be deemed not to be the carrying of passengers for compensation or hire:

(i) carrying another person, where the other person reciprocates;

(ii) carrying another person occasionally and infrequently, who shares the cost of the trip;

(iii) carrying a domestic servant of the insured or of his or her spouse;

(iv) carrying clients or customers or prospective clients or customers; or

(v) transporting children occasionally and infrequently to or from school, or school activities conducted within the educational program.

(Emphasis added)

Exclusions also apply where the vehicle is rented or leased to another and where it used to carry explosives or radioactive materials. The exclusion in paragraph 5.12(c) appears intended to apply to Part B benefits. Only the exclusion of vehicles carrying explosives or radioactive material is made subject to the proviso "except as provided in Part B (Statutory Accident Benefits).

These exclusions in the policy derive their authority from section 250(1) of the Act which states that:

The insurer may provide under a contract evidenced by a motor vehicle liability policy, in one or more of the following cases, that, except as provided in the Statutory Accident Benefits Schedule, it shall not be liable while:

(c) the automobile is used as a taxicab, public omnibus, livery, jitney or sightseeing conveyance or for carrying passengers for compensation or hire¹⁰

The arbitrator rejected State Farm's arguments.¹¹ Following the analysis in Movahedi, she found that the terms of paragraph 5.2.2 (d) are considerably more stringent than the definition of "insured person" in subsection 1(a) of the Schedule and paragraph 2.4 of the policy. She summarised some of the differences at pages 8-9 of her decision:

Under the terms of paragraph 5.2.2(d) of the policy, for Mr. Brown, (or his wife) to be "an insured person" under the State Farm policy while travelling in another person's automobile, he must also be "personally driving" the other vehicle. Dependants are not even mentioned ...and the description of spouse is confined to someone "if residing in the same dwelling premises as the insured", contrary to the definition of spouse found in section 224(1) of the Insurance Act and paragraph 5.2.4 of the policy.

At the time of this accident, Mr. Brown was driving another automobile, but that is not the important point. What is important is the conflict in the language. If Mr. Brown and his spouse and any dependant are travelling as passengers in another friend's car, we expect their accident benefits to be paid by State Farm following the definition of "insured person" of section 1 of the Schedule and paragraph 2.4 of the policy. We would not expect the insurer to invoke the more exclusionary language of paragraph 5.2.2(d) to attempt to deny payment.

(Decision, page 8-9)

The arbitrator concluded that the exclusion in paragraph 5.12(c) of the policy did not apply for the reasons set out in Movahedi.

Following Movahedi, the arbitrator rejected an interpretation that would narrow the accident benefit protection afforded by the plain language of the 1994 Schedule, and concluded that any inconsistency between the terms of the policy and the 1994 Schedule must be resolved in favour of the broader provisions of the Schedule, by reason of subsections 268(1) and 227(5) of the Act. This reasoning has been followed in other cases.¹²

I agreed with this reasoning in general in Portch. That case did not involve a taxicab but a heavy commercial vehicle. Mr. Portch was injured while driving his transport truck. He was not named on the fleet policy that insured it, but held insurance on two family cars. The insurer of his personal vehicles argued that it was not responsible for Mr. Portch's benefits because the vehicle he was driving was not covered under the definition of "any other automobile" under the policy. Paragraph 5.2.2(d)¹³ excludes coverage of another automobile if it weighs more than 4,500 kilograms or is being used for commercial delivery at the time of the loss. I concluded that Mr. Portch was an insured person in respect of his personal vehicle insurance policy and must claim benefits under it, even though the accident involved his transport truck. Although that decision involved the pre-1994 Schedule, in my view, the reasons I adopted then apply to this case.

State Farm argues that the term "another automobile" in the section 1 of the Schedule is ambiguous and should be construed consistently with the meaning of "any other automobile" in section 5.2.2(d)(vi) of the policy. However, I agree with the arbitrator that the language should be given its ordinary meaning. The context of the words used does not support State Farm's position. There are two relevant parts to the section 1 definition, involving: 1. the insured automobile, i.e. any automobile covered by the policy and 2. another automobile. Any automobile covered by the policy presumably includes the extended coverage set out in paragraph 5.2.2(d) of the policy. Therefore, "another automobile" must mean something else.

Paragraph 5.12(c) of the policy applies to "the automobile", the term defined in the policy. Since the vehicle Mr. Brown was driving does not fall within that defined term, paragraph 5.12(c) does not appear to apply.

In defining "insured person", the language of the 1994 Schedule (and section 2.4 of the policy) is not limited by the exceptions set out in paragraph 5.2.2 (d)(vi) of the policy, and there is no equivalent exclusion of taxicabs to that contained in paragraph 5.12(c) of the policy. Although I do not accept that there is a conflict between the language of the Schedule and the terms of the policy, properly construed, as they apply to this case, if there were, any such conflict must be resolved in favour of the broader terms of the 1994 Schedule.

Section 268(1) of the Act states that every contract evidenced by a motor vehicle liability policy shall be deemed to provide for the statutory accident benefits set out in the Schedule, "subject to the terms, conditions, provisions, exclusions, and limits set out in that Schedule".

It would have been a simple matter to have incorporated the desired provisions of the policy by reference or to have inserted the required limitations directly into the Schedule. I note that the pre-1994 Schedule's predecessor, "Schedule C" to the Insurance Act, R.S.O. 1980, c. 218 specifically qualified the meaning of insured person to exclude the insured and his or her family when they were the occupants of another vehicle which was used for carrying passengers for compensation or hire or for commercial delivery.¹⁴ Schedule C also expressly stated that "in so far as applicable, the general provisions, definitions, exclusions and statutory conditions of the policy also apply ". These provisions were not included in the Schedule but the similarities in language in the policy prompted the arbitrator to suggest that "the problem may have arisen in borrowing language from the previous "Schedule C".¹⁵

I cannot find authority for the exclusion elsewhere in the Act. Section 250(1) of the Act, which is the source of authority for the exclusion of vehicles used as taxicabs in the policy is made subject to an express proviso. The insurer may exclude coverage under its policy for the uses set out in section 250(1) "except as provided in the ...Schedule". I note that there was no such qualification under the section's predecessor.¹⁶ State Farm suggests that the language used means that the exclusion in the policy governs unless the Schedule expressly provides otherwise. I do not read the statutory language this way. If the Schedule does not set out the qualification in issue, then surely the Schedule provides for the benefits without it.

State Farm essentially argues that accident benefits are provided under the umbrella of the contract of insurance, in which the outer parameters of coverage are determined, among other things, by the automobiles insured under the terms of the policy. If benefits are payable under the policy, they are subject only to the terms, conditions and exclusions set out in the applicable Schedule. However, one must look at the scope of the policy to determine whether benefits are payable in the first place. The Commissioner of Insurance has been given express legislative authority to approve the content of policies, including the form of standard policies. Pursuant to that authority, the Commissioner has authorised a form of Owner's Policy that excludes vehicles driven as taxicabs and does not extend coverage to other vehicles that are used for carrying passengers for compensation or hire. He has also approved an endorsement that covers taxicabs. To disregard the provisions of the policy would be to ignore the approved terms of the contract of insurance entered into by the parties and to fail to give effect to the Commissioner's statutory mandate.

State Farm relies on the decisions in Warwick et. al. v. Gore Mutual Insurance Co. et. al., (December 12, 1995) 5546/92, (Gen. Div.) and Gore Mutual Insurance Company v. The Co-operators General Insurance Company, (January 9, 1996) C23778, (Gen. Div.). Although these cases dealt with a different issue and did not involve a conflict between the Schedule and the policy, State Farm argues that they represent a method of interpretation that is applicable here. It cites these cases for the proposition that in construing statutory requirements, one must consider the entire automobile insurance legislative scheme - the Act, the Schedule and the policy.

In his decision in Warwick, Justice Morin stated:

......it would be inappropriate in circumstances such as these to deprive the parties of access to the Regulation and to the actual policy of insurance that has been prescribed by law. ...in determining matters of conflict between two or more insurers it is incumbent upon the court to consider not only the provisions of the Act but rather the entire scheme of automobile insurance legislation.

(Warwick, page 14)

In Portch, I agreed that, where possible, the regulation and policy should be construed harmoniously. In the even of a conflict, however, the Schedule prevails:

The Commissioner's authority to determine the content of automobile polices is qualified by the terms of section 268(1) of the Act, which mandates that every policy shall provide accident benefits subject to the "terms, conditions, provisions, exclusions and limits set out in that Schedule." This includes the definition of the persons who are entitled to benefits under the policy. The definition of insured person under subsection 2(c) does not contain the limiting words [the personal vehicle insurer] seeks to put on them, and in my view, cannot reasonably be read so as to contain them. Accident benefits are governed by the Schedule and in so far as there is a conflict, the Schedule must prevail.

(Portch, page 18)

I did not hear any argument that convinced me that the approach I adopted in Portch was wrong. If anything, subsequent judicial developments after the appeal in this case was heard reinforce that view.

In Luu and Zurich Insurance Company, (April 7, 1996, OIC P96-00045A), the Director of Arbitrations considered the entire automobile insurance scheme in determining the territorial application of accident benefits under the 1994 Schedule. The 1994 Schedule defines "insured person" to include the named insured if involved in an accident "outside of Ontario" that involved the insured automobile or another automobile. It does not contain any territorial limitation but the policy does. The Director of Arbitrations applied the territorial limitations in the policy to the 1994 Schedule. She held that the 1994 Schedule referred to insured persons in the specific context of a particular motor vehicle liability policy, and its language should be construed accordingly. The decision was upheld on judicial review by the Divisional Court in Luu v. Zurich Insurance Company, (March 17, 1997) 451/96 (Div. Ct.).

The Court of Appeal in Prasad v. GAN Canada Insurance Co., (May 5, 1997) C25640 (C.A.), a subsequent case dealing with similar facts, expressly disagreed with the reasoning of the Divisional Court that there was no conflict between the contractual provisions in the policy and the Schedule, or that, if there were, the more specific words of the contract should prevail. The unanimous judgment of the Court was delivered by Southey J.A. He held that the territorial restriction in the policy could not limit the coverage provided under the accident benefit regulations by reason of subsection 268(1) of the Act. At page 4, he stated:

I agree with the decision of the learned judge that a territorial limitation inserted in the contract of insurance by the defendant could not effectively reduce the coverage under the Benefits Schedule. That coverage was required by statute, and could be limited only by statute.

In my view, this reasoning supports the interpretation of "another automobile" in section 1 of the 1994 Schedule adopted here.

The decision of the Court of Appeal in Warwick et al. v. Gore Mutual Insurance Co. et. al.,¹⁷(January 22, 1997) C23617,(C.A.) was also issued after Portch. Ms. Warwick was listed as an occasional driver under her father's policy, but was injured while riding in another vehicle. The issue was which insurance company was required to pay her benefits - the insurer of her father's vehicle, having received an additional premium to list her as a driver, or the insurer of the vehicle in which she was an occupant. The Court of Appeal upheld Justice Morin's decision that the latter was responsible. The Court confirmed that contractual entitlement to no-fault benefits was determined by section 268(1) of the Act and the definition of "insured person" under the Schedule, not by a broader statutory definition, and stated at page 12:

By making contractual entitlement to no-fault benefits "subject to the terms, conditions, provisions, exclusions and limits" in the Schedule, the Legislature, in s. 268(1) of the Act, intended that entitlement to these benefits would be determined by regulation.

(Warwick, page 12)

In the Court's view, the fact that a small additional premium had been paid to cover Ms. Warwick as a listed driver did not change the result. At page 16, the Court responded in the following terms to the argument that it should favour an interpretation that places responsibility on the insurer that receives the premium:

That may be so if liability for no-fault benefits is unclear, but it is not and the payment of an additional premium cannot override the terms of the statute and the Schedule.

Although the Court emphasised that it was dealing with a small premium payment (as opposed to the significant risk differential between personal passengers vehicles and taxicabs), the judgement deals with principles of statutory interpretation relevant to this case. In this case, I do not find any ambiguity in State Farm's liability to Mr. Brown and the ordinary meaning of the terms of the Schedule must govern.

In summary, I agree with the arbitrator that the exclusions in paragraph 5.2.2 (d) (vi) and paragraph 5.12(c) of the policy do not operate to restrict the broad coverage set out in section 1 of the Schedule. I agree that Mr. Brown is an insured person in respect of the State Farm policy and an insured under subsection 268(2)1.i. The arbitrator found that Mr. Brown was an insured under both the State Farm and the Simcoe & Erie policies. She therefore went on to consider the application of subsections 268(4), (5), (5.1) and (5.2) of the Act. They state:

(4) If under subparagraph i. or iii. of paragraph 1 or subparagraph i. or iii. of paragraph 2 of subsection (2), a person has recourse against more than one insurer for the payment of statutory accident benefits, the person in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.

(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is a spouse or a dependant, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.

(5.1) Subject to subsection (5.2), if there is more than one insurer against which a person may claim benefits under subsection (5), the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.

(5.2) If there is more than one insurer against which a person may claim benefits under subsection (5) and the person was, at the time of the accident, an occupant of an automobile in respect of which the person is the named insured or the spouse or a dependant of the named insured, the person shall claim statutory accident benefits against the insurer of the automobile in which the person was an occupant.

It is agreed that Mr. Brown is a named insured under the State Farm policy. However, the arbitrator found that he was not a named insured under the Simcoe & Erie policy. She found, on the limited facts available, she had no basis to consider the application of section 91 of the 1994 Schedule, which addresses the situation of rental vehicles or vehicles made available for the regular use of an individual. A corresponding provision in the pre-1994 Schedule has been the subject of conflicting views.

I have no basis to disturb the arbitrator's finding. That being the case, Mr. Brown must claim benefits against State Farm pursuant to the order of priorities established in the Act, even though the accident involved the taxicab. Although I am unsure that this result was intended by the drafters, in my view, it is dictated by the express provisions of the legislation and regulations. The arbitrator's order is therefore confirmed.

June 19, 1997

Susan Naylor

Director’s Delegate

Date

Footnotes

1. 1The plain-language Ontario Automobile Policy - Owner's Policy (O.A.P No. 1) came into effect on March 31, 1994. It therefore does not apply to this case.
2. 2There was no evidence before the arbitrator as to whether a fare-paying passenger was on board.
3. 3Evidence was given by Senior Underwriters from both insurers, but the rating evidence before me is limited. An affidavit sworn by a Senior Underwriter with Simcoe & Erie was marked as an exhibit. The arbitrator heard testimony from a Senior Underwriter with State Farm. The arbitrator does not make specific reference to the testimony in her decision, and it appears that the proceedings were not recorded by a court reporter.
4. 4The unique nature of the taxi industry and its insurance problems have been the subject of a number of reports. In his Report of Inquiry into Motor Vehicle Accident Compensation in Ontario, 1988, Volume 1 at pages 239-240, Mr. Justice Osborne described the overall situation then, stating that taxis presented "a unique premium problem" and that the root cause of this was "horrendous loss costs". Although his report pre-dated the 1990 changes to tort and no-fault and dealt with all coverages, it provides a useful summary.
5. 5The Act, ss. 268(4) and (5). Section 5, 5.1 and 5.2 also apply to the spouse or dependants of the named insured.
6. 6The Act, subsection 5.2.
7. 7The Act, subsection 5.1.
8. 8See Warwick et. al. v. Gore Mutual Ins. Co. (January 22, 1997) C23617 (C.A.).
9. 9Under section 227(1) of the Act, any motor vehicle liability policy, endorsement form or claims forms must be approved by the Commissioner of Insurance, although he or she has a discretion in subsection 227(2) to approve a form of policy or endorsement that contains provisions that are inconsistent with the Act in certain circumstances. The Commissioner's authority to approve standard policies derives from subsection 227(5), as amended by section 14 of the Insurance Statute Law Amendment Act, 1993 which provides that the Commissioner "may approve the form of standard policies containing insuring agreements and provisions in conformity with this Part for use by insurers in general."
10. 10Subsection 250(4) lists those situations sets out in the policy that are not considered the carrying of passengers for compensation or hire.
11. 11According to the arbitrator, there was no evidence whether Mr. Brown was carrying a passenger when the accident happened but she proceeded on the basis that the taxicab was used for carrying passengers for compensation or hire at the time of the loss.
12. 12See e.g. Boateng and Coachman Insurance Company, Boateng and Progressive Casualty Insurance Company of Canada, (January 13, 1996, OIC A-009580 and 009581); Addai-Agyekum and Coachman Insurance Company, Addai-Agyekum and Citadel General Insurance Company, (October 13, 1995, OIC A-009690 and A-009691, appeal pending); and Aujla and Progressive Casualty Insurance Company of Canada, Aujla and Old Republic Insurance Company, (March 20, 1996, OIC A-95001628 and A-951629)(appeal pending).
13. 13The order of numbering in section 5.2.2 of the pre-1994 O.P.F Form No. 1 and the post-1994 O.P.F. Form No. 1 that governed until March 31, 1994 was changed. What is paragraph 5.2.2(iv) (f) under the former is paragraph 5.2.2(d)(vi) under the latter.
14. 14Schedule C, subsection 3 (1)(b)(v);
15. 15Decision, page 10.
16. 16Insurance Act, R.S.O. 1980, c. 218, s. 218.
17. 17This included the appeal in Gore Mutual Ins. Co. v. The Co-operators Ins. Co., C23778.