Court Finds Coverage under OPCF 44R

April 21, 2011

This week’s Ontario Reports contained an interesting coverage decision involving Ontario’s Family Protection Endorsement and claims against the Motor Vehicle Accident Claims Fund.

In Graham v. Superintendent of Financial Services Commission of Ontario (2010 ONSC 7129), Christine Graham was riding her bicycle in Ontario when a car struck her. The car left the scene. Neither the owner nor the driver of the car was ever identified.

At the time of the accident, Christine was living in Toronto with her sister, Donna, who had an automobile insurance policy with Traders General Insurance Company that included optional Family Protection Coverage Endorsement (“OPCF 44R”). On the date of the accident, Christine owned a 1997 Toyota that was registered and plated in Nova Scotia, where she previously lived. The Toyota was not insured at the time of the accident, and had not been insured since March 2003. Christine testified at an examination for discovery that she did not have insurance on the car because she was not driving it. The car was parked at Donna’s house.

Because she was struck by an unidentified vehicle, Christine commenced an action against the Motor Vehicle Accident Claims Fund (FSCO). Once it was revealed at her examination for discovery that she may be able to recover under Donna’s policy with Traders, Christine’s counsel obtained an order adding Traders as a defendant to the action.

The Fund then moved for summary judgment dismissing Christine’s claim and any crossclaims against it on the basis that she was an insured person for the purpose of coverage under an automobile policy with Traders, and was therefore not entitled to seek payment of any judgment rendered in her favour out of the Fund. Traders

The issue turned on whether Christine fell within the definition of “dependent relative” in s. 1.2 of OPCF 44R:

1.2 “dependent relative” means

( a ) a person who  is principally dependent   for   financial  support  upon  the named  insured or  his or  her  spouse,  and who  is

(i) under the age of 18 years;

( ii )  18 years or over and is mentally or physically incapacitated;

( iii )  18  years or  over  and  in  full   time attendance at  a school ,  college or  university;

( b ) a  relative of   the named  insured or  of  his or  her  spouse,  who  is principally dependent  on  the named  insured or  his or  her  spouse  for   financial  support ;

( c ) a  relative of   the named  insured or  of  his or  her  spouse,  who  resides  in  the same dwelling premises as  the named  insured;  and

(d) a relative of the named insured or of his or her spouse, while an occupant of the  described automobile, a newly acquired automobile, or a temporary substitute automobile, as defined in the Policy.

BUT subsections 1.2(c) and 1.2(d) apply only where the person injured or killed is not an insured person as defined in the family protection coverage of any other policy of insurance or  does not  own,  or   lease  for  more  than 30 days, an automobile which  is  licensed  in any  jurisdiction of  Canada where  family protection coverage  is available. [emphasis added]

On the facts, the only criteria that could have qualified Christine was under (c), which the Fund argued applied. Traders argued that Christine was not a dependent relative under (c) because she owned a vehicle that was licensed in Nova Scotia, which offered its own form of family protection coverage (under the S.E.F. No. 44 “Family Protection Endorsement”, which is the standard form used in Nova Scotia).

The judge found that Christine was a dependent relative under (c) for the following reasons:

1 – He found that Nova Scotia did not offer “family protective coverage”. The OPCF 44R defines “family protection coverage”, as follows:

1.4 “family protection coverage” means the insurance provided by this change form and any similar indemnity provided under any other contract of insurance. [emphasis added]

The judge found that Nova Scotia’s S.E.F. Endorsement is not “similar” to Ontario’s OPCF 44R because the Nova Scotia endorsement does not contain coverage for accidents involving unidentified drivers. It is only available for accidents involving identified owners or drivers of underinsured automobiles. The Ontario coverage is available in cases involving unidentified automobiles. The family protection coverage in Nova Scotia would not cover Christine’s loss in this case.

2 – Even if the two endorsements were “similar”, the judge found that as Christine did not have any insurance on her vehicle, she did not have a standard automobile policy to which she could add family protection coverage for an additional premium. In other words, the coverage wasn’t “available”.

For these reasons, the judge found that Christine was a dependent relative under the Traders’ OPCF 44R, as the “BUT” exception under section 1.2 didn’t apply. Further, as she was a dependent relative under the endorsement, her claims against the Fund were dismissed.

As an aside, the judge also dismissed an argument that, even if the court found that Christine was a “dependent relative” and entitled to recover under the Traders policy, she may still have a claim against the Fund for the first $200,000 of any judgment she obtains. The argument was that the OPCF 44R coverage is “excess” to any amounts available to the claimant from “an unsatisfied judgment fund or similar plan in a jurisdiction other than Ontario, or which would have been payable by such fund or plan had this change form not been in effect.”

The judge rejected this argument, finding that the Fund was not required to pay any amounts where a claimant was covered under another policy of insurance.

This decision raises some troubling issues for insurers: Firstly, Traders likely did not appreciate the risk when it issued the OPCF 44R to Donna that it would also be covering her sister from Nova Scotia who happened to be living with her in Ontario. How many other insurers might also be covering similar potential claimants? Secondly, it likely shrinks the list of jurisdictions that might have otherwise had “similar” coverages as the OPCF 44R, thereby increasing the amount of potential claimants that could now qualify as dependent relatives under the OPCF 44R. It also raises a question as to whether a “critical difference” in an otherwise similar endorsement renders the endorsement “dissimilar”.

We are looking into whether the decision was appealed. Stay tuned…

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