A recent Ontario Court of Appeal decision explained that not all passengers in motor vehicle accidents will be covered by the car owner’s insurance. Specifically, a passenger will not be covered if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile.

What Happened?

A man sustained injuries in a motor vehicle accident. He was a passenger in a vehicle driven by an unlicensed driver, without the permission of the car’s owner.

The passenger sued the driver of the vehicle, the owner of the vehicle, and the owner’s liability insurer. He claimed that he was an “insured” under the owner’s policy issued by an insurance company, and was entitled to uninsured motorist coverage for damages under s. 265(1) of the Insurance Act.

Lower Court Decision

On summary judgment, the motion judge dismissed the passenger’s claim against the car owner’s insurer. He found that, pursuant to s. 1.8.2 of the standard Ontario Automobile Policy, the insurance contract excluded uninsured motorist coverage for the passenger because the automobile was operated without the owner’s consent.

Consequently, the passenger’s claim under the owner’s policy was limited to certain Statutory Accident Benefits. Any other claim would have to be made to the Motor Vehicle Accident Claims Fund.

The passenger appealed the decision on several grounds.

Court of Appeal Decision

The passenger asserted that he qualifies as an “insured” under the Insurance Act because, as an occupant of the vehicle, he was entitled to receive Statutory Accident Benefits under the owner’s policy. He further claimed that, having qualified as an “insured”, he also qualified as “a person insured under the contract” under s. 265(1) and was therefore entitled to uninsured motorist coverage.

Section 265(1)(a) and (b) provides that:

Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile.

In response to the passenger’s claim, the Court of Appeal noted that the provision expressly provides that this is “subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.” As a result, the court explained that, even if the passenger had qualified as “a person insured under the contract”, the coverage available can be modified or excluded by regulation.

In fact, the relevant Ontario Automobile Policy, which is the standard automobile policy for use by automobile owners in Ontario, provides in s. 1.8.2:

“Except for certain Accidents Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile.”

Caselaw has established that the effect of s. 1.8.2 is to exclude coverage for damages for personal injury under the uninsured automobile coverage where the operator is in possession of the automobile without the owner’s consent and the provision is applicable to both occupants of the vehicle and non-occupants.

As a result, the court found that coverage for the passenger in this case, an occupant of a vehicle driven without the owner’s consent, was plainly excluded, with the exception of certain Statutory Accident Benefits.

Therefore, the court dismissed the appeal.

 Get Advice

In the event of serious injury following a car crash, retaining a lawyer can help you to get the long-term support you need from your insurance company and the compensation that ought to be paid by the parties at fault for your accident.

At Petker Campbell Postnikoff, we investigate your claims arising from a car accident, and we seek the compensation you need to recover from your injuries. In the event you have sustained a catastrophic physical impairment or any permanent, serious impairment of any important physical, psychological or mental function, we will help obtain your insurance benefits and fair compensation from those at fault for the motor vehicle accident. We are experienced in handling cases for the most severely injured. We understand the challenges and worries faced on a day-to-day basis by those dealing with newfound hardships.

Legal advice can help you make sure you have what you need following a car accident. To speak with the Waterloo car accidents lawyers at our firm, call us at 519-886-1204 or contact us online. We offer prospective accident clients a free initial consultation.