Released Date: 04/01/2020
In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.
Between:
J.J.
Applicant
and
Jevco Insurance
Respondent
DECISION AND ORDER
VICE-CHAIR:
D. Gregory Flude
APPEARANCES:
For the Applicant:
Joseph Cescon, Counsel and Ryan Mariachi, Student-at-Law
For the Respondent:
Pauline Pitney, Claims Representative
Tracy Brooks, Counsel and Emily Wilson, Student-at-Law
Court Reporter:
[V.S.]
HEARD: In-Person:
October 23, 2019 with written submissions to follow
REASONS FOR DECISION AND ORDER
OVERVIEW
1The respondent, Jevco Insurance (“Jevco”), has brought a preliminary issue motion to determine if the applicant, [J.J.], was insured to drive the motorcycle he was driving at the time of the accident under a policy issued by Jevco. The consequences for [J.J.] of a finding that he was not insured are dire. He would lose the right to several benefits, most notably an income replacement benefit or a non-earner benefit.
2The resolution of the dispute revolves around the wording of a provision of the standard automobile insurance policy in Ontario: the Ontario Automobile Policy Owner's Policy (“OAP 1”). [J.J.] had purchased the motorcycle on July 5, 2016. Eleven days later, he was involved in a motor vehicle accident while driving the motorcycle and sustained serious injuries. There is a provision in the OAP 1 that extends coverage for newly acquired vehicles for a period of 14 days. The interpretation of that provision is at the heart of this dispute.
PRELIMINARY ISSUE
3The preliminary issue I am required to address is set out in a case conference order released on July 2, 2019. It states:
a. Is the applicant precluded from receiving the benefits in dispute? Did the applicant have insurance coverage for the accident?
4The case conference order asks two questions. I must answer the second question first: Did the applicant have insurance coverage for the accident? The resolution of this question requires an analysis of the wording in the OAP 1. If the motorcycle was covered, then [J.J.] is entitled to no-fault benefits under the Schedule. If I find no policy was in effect, then I must determine if [J.J.] knew or ought reasonably to have known that he had no insurance coverage.
5The listed benefits in dispute ̶ an income replacement benefit, visitor expenses and a housekeeping and home maintenance benefit ̶ are all excluded if the motorcycle was not covered by a policy of automobile insurance at the time of the accident and [J.J.] knew or ought reasonably to have known that was the case.
RESULT
6Having considered the evidence and the submissions of the parties, I find that [J.J.] was covered by the Jevco insurance policy at the time of the accident.
ANALYSIS
Facts
7While there is some material disagreement over the facts, the underlying sequence of events is not in dispute.
8[J.J.] purchased a Harley Davidson motorcycle on July 5, 2016. He registered it in his name that day and was issued a licence plate. Not specifically in issue, but a reasonable deduction from the fact of registration, is that he used his existing Jevco policy as proof of insurance, as he had no other insurance.
9On July 4, 2016 [J.J.] contacted his broker, Joshua Madeiros, at All Risk Insurance Brokers to request for a quote on a Harley Davidson. On July 6, Mr. Madeiros informed [J.J.] that Jevco did not underwrite motorcycle insurance and, given [J.J.]’s poor driving record he would have to seek insurance through the insurer of last resort, the Facility Association.
10Jevco takes the position that [J.J.] did not inform Mr. Madeiros, and by extension, Jevco, that he had purchased the motorcycle on July 5 or in any subsequent discussion about coverage on July 6 and 11. In none of these conversations did [J.J.] provide the date of purchase, purchase price, VIN number or make and model of the motorcycle. Jevco takes the position that [J.J.] did not inform it of the purchase of the motorcycle until August 2, 2016, approximately 28 days after purchase. Jevco’s position is supported by the transcripts of the telephone calls between [J.J.] and Mr. Madeiros.
11The transcript of the August 2, 2016 telephone conversation is instructive in identifying the state of knowledge and expectations of the both Mr. Madeiros and [J.J.]. Mr. Madeiros called [J.J.] and discovered that he had been in a motorcycle accident. Mr. Madeiros says: “I didn’t even know you had a bike, man” and [J.J.] answers: “I [expletive] bought it.” Later in the conversation, Mr. Madeiros asks: “Were you driving your like a buddy’s bike or your own bike” to which [J.J.] answers: “My own bike.” Mr. Madeiros then asks: “Did you at least have insurance on that bike?” [J.J.] answers: “No.”
12From the July 6, 11 and August 2 conversations, it is clear that, prior to the accident on July 11, 2016, [J.J.] was aware that Jevco did not underwrite motorcycles and that, as a high-risk driver, he would need to get insurance through the Facility Association. Importantly, it was his subjective understanding that he did not have insurance.
13Despite the fact of [J.J.]’s subjective understanding that he was uninsured, he may well have had insurance if his purchase of the motorcycle was captured by the newly acquired automobile provisions of his Jevco insurance policy.
The Policy - OAP 1
14The contents of all automobile insurance policies in Ontario are mandated by regulation. The basic policy is set out in the OAP 1. OAP 1 contains a section relating to newly acquired automobiles, section 2.2.1. It states:
2.2.1 Newly Acquired Automobiles
A newly acquired automobile is an automobile or trailer that you acquire as owner and that is not covered under any other policy. It can be either a replacement or an additional automobile. The replacement automobile will have the same coverage as the described automobile it replaces. We will cover an additional automobile as long as:
we insure all automobiles you own, and
any claim you make for the additional automobile is made against a coverage we provide for all your other automobiles.
Your newly acquired automobile(s) will be insured as long as you inform us within 14 days from the time of delivery and pay any additional premium required.
We may inspect the newly acquired vehicle and its equipment at any reasonable time.
15The dispute between the parties arises out of the interpretation of the 14-day notice provision in section 2.2.1 of the OAP 1. Jevco submits that failure to give notice within 14 days disqualifies the owner from coverage from the date of possession of the newly acquired vehicle. [J.J.] submits that the 14-day term is an automatic extension that expires on the 15th day if no notice is given. Since his accident occurred on the 11th day, he was covered at the time of the accident. I agree with [J.J.] that he was insured on the date of the accident.
16[J.J.] relies on the decision of the Court of Appeal of Ontario in Hunter Estate v. Thompson, 2003 CanLII 23007 (“Hunter Estate”) endorsing a lower court decision that the 14-day extension is automatic. The appeal arose from a decision on a motion to determine a question of law under the Rules of Civil Procedure (see Hunter Estate, 2002 CanLII 9225 (ON SC)). The insured, Gerry Kozowy, had purchased an additional vehicle, a 1992 GMC pick-up truck. Within 14 days of the purchase, the vehicle was involved in an accident while being driven by her friend, Bruce Thomas. Ms. Kozowy did not notify the insurer of the purchase within 14 days. At first instance, in determining that there was coverage, Del Frate J. defined the issues as follows:
a. Did the 1992 GMC pick-up truck have coverage under the said insurance policy, even though the defendant Kozowy did not inform Kingsway [General Insurance] of its acquisition within 14 days of the purchase?
b. Does the insurance policy apply here, in light of the fact that Kingsway did not cover the defendant Kozowy's half-ton Ford pick-up truck? And, [sic]
c. Is the required additional premium relevant here?
17Specifically, Del Frate J. found:
22… [T]he insurer would not have included an "additional automobile" under the definition provided in s. 2.2.1 if it did not intend that such automobile be "automatically covered" during those 14 days.
23Accordingly, the reasoning as discussed in Belanger, Waterloo Mutual, and Hogan, of "automatic coverage" during those 14 days, is applicable in this fact situation since the changes in the policy include coverage to an "additional" vehicle.
18By the time the matter came before the Court of Appeal, new facts had come to light. Del Frate J. had dealt with the uninsured half-ton Ford pick-up on the basis that it was parked and inoperable. It was, in fact, operable and the Agreed Statement of Facts before the Court of Appeal was amended to reflect that fact.
19The focus of the Court of Appeal decision in Hunter Estate is on the condition that all of Ms. Kozowy’s vehicles be insured, including the parked but operable Ford half-ton. It stated:
On the facts we have now, the plain words of s. 2.2.1 require that the owner insure with the insurer all of the automobiles he owns. If the insured owns automobiles that he insures with another insurer or that he leaves uninsured, the precondition is not met.
20The Court went on to address Del Frate J.’s finding that there was automatic coverage for 14 days at paragraph [10] of the decision. It stated:
We would not give effect to the argument that, if the precondition is met, the automobile is not automatically insured for 14 days under the policy. Again, on the plain wording of s. 2.2.1, it is automatically insured for 14 days.
21Jevco argues that Hunter Estate, and particularly Del Frate J.’s analysis on the motion, are distinguishable from the current facts. It does so on several grounds:
a. The case analyzes the historical development of s. 2.2.1., not its current iteration;
b. The case assumes that the insurance company has collected a premium;
c. The case assumes that the additional automobile would otherwise be eligible for coverage; and
d. The case assumes that the “risk” is more focussed on the driver than on the vehicle and [J.J.] was high risk.
22With respect, I disagree. There is no doubt the Del Frate J. conducted a historical analysis of how the “additional automobile” wording was added to s. 2.2.1. He did so to distinguish case law that interpreted the earlier policy wording that defined a newly acquired automobile as a “replacement automobile.” The “additional automobile” wording had recently been added to s. 2.2.1. and the decision does no more than point out that the more recent wording provides a broader spectrum of coverage. That analysis has no application on the current facts since there is no dispute that the motorcycle was an additional automobile and that s. 2.2.1. includes additional automobiles.
23In my view, Jevco mischaracterizes the discussion regarding premium. Del Frate J.’s analysis does not address the question of additional premium other than to say that additional premium would be due if the automobile were to be added to the policy. The analysis actually addresses the premium for the insurance that was in place at the time. What Del Frate J. was saying is that, in underwriting the original policy, the insurance company was aware of the 14-day newly acquired automobile provisions and factored that risk into their premium calculation. In Hunter Estate, as on the current facts, the insured had paid the premium for the 14-day extension when he originally placed the policy. Additional premium only comes into play for insurance beyond the 14 days.
24While in his discussion of risk to the insurer, Del Frate J. talks about similarity of risk and the nature of the driver, I do not accept that this analysis displaces the wording of the policy. Section 2.2.1. speaks to newly acquired automobiles. It does not limit itself to like automobiles or automobiles intended for a similar use. Had that been the intention of the drafters of the policy, it would have been explicitly stated. The policy defines the coverage. Jevco must be understood to have known the risk it was covering and that a newly acquired vehicle might be a motorcycle, notwithstanding that it does not cover motorcycles. It must therefore be taken to have factored the risk of covering a motorcycle for a 14-day period into its premium calculations.
25Based on the above, I am satisfied that [J.J.] was covered by the Jevco insurance policy at the time of the accident, as he had an automatic 14-day extension. The accident occurred on the 11th day.
ORDER
26I find that [J.J.] is not precluded from receiving the benefits in dispute as he had insurance coverage on the day of the accident.
27Within 15 days of the release of this decision, the parties shall contact the Tribunal with mutually-agreed dates, for a continued case conference to address a hearing on the remaining, outstanding issues.
Released: April 1, 2020
D. Gregory Flude
Vice-Chair