Truck drivers and the troubling risk of underinsured motorists

The conditions of the Ontario Automobile Policy applied such that the insured did not have the benefit of any underinsured coverage on his personal vehicle when he was injured on the job with his commercial truck.

Insurance law – Automobile insurance – Fleet insurance – Underinsured motorist – Statutory provisions – Exclusions – Practice – Summary judgment – Leave to appeal

Kahlon v. ACE INA Insurance, [2019] O.J. No. 4962, 2019 ONCA 774, Ontario Court of Appeal, October 1, 2019, P.D. Lauwers, G. Huscroft and G.T. Trotter JJ.A.

The plaintiff’s company owned and leased a tractor to Bell City Transport Systems Incorporated (“Bell City Transport”), and the plaintiff operated the tractor as an independent contractor for Bell City Transport under fleet insurance provided by ACE INA Insurance (“ACE”). The plaintiff also had a personal motor vehicle, which was insured by AllState. Both the ACE and the AllState policies had attached endorsements which provided underinsured vehicle coverage.

The plaintiff was operating the tractor in Florida when he was struck by a Florida domestic vehicle which only had $20,000 in liability coverage. The at-fault vehicle’s available insurance was woefully inadequate, as the plaintiff suffered serious injuries as a result of the accident, including a traumatic brain injury.

The parties sought a determination as to whether either of ACE or AllState were obliged to provide underinsured coverage to the plaintiff under the endorsement in their respective policies. The motion judge granted summary judgment to the plaintiff and declared that AllState was obliged to respond to his underinsured coverage claim. The motion judge declared that ACE was not obliged to respond.

AllState appealed and the plaintiff cross-appealed with respect to underinsured coverage under the ACE policy.

The Court of Appeal allowed AllState’s appeal and dismissed the plaintiff’s cross appeal.

The AllState policy attached the OPCF 44R Family Protection Coverage endorsement, which is optional underinsured coverage. The endorsement states: “Except as otherwise provided in this change form, all limits, terms, conditions, provisions, definitions and exclusions of the Policy shall have full force and effect.” The Court of Appeal found that the conditions of the Ontario Automobile Policy (the “Policy”) are applicable to the endorsement. One of the conditions of the Policy is that, if an insured is driving a vehicle not described on the Policy, for coverage to be extended to that vehicle, it must not have a gross vehicle weight rating of more than 4,500 kg. The Court held that this condition precluded the extension of underinsured coverage to the plaintiff’s tractor.

With respect to the ACE policy, the Court of Appeal held that the endorsement attached to the fleet policy only provided coverage for passenger vehicles and light commercial vehicles and specifically excluded coverage for heavy commercial vehicles. Further, despite the fact that the endorsement excluding coverage had not been approved as to form by the Superintendent of Financial Services under s. 227 of the Insurance Act, it was nonetheless enforceable.

The Court acknowledged the plaintiff’s difficult circumstances, but concluded that it had no authority to override contractual language of the insurance policy and the endorsement.

This case was digested by Tricia M Milne, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Tricia M. Milne at [email protected].

To stay current with the new case law and emerging legal issues in this area, subscribe here.