Supreme Court


Insurance

AUTOMOBILE INSURANCE
Applying established ‘nexus’ test, first insurance company to receive completed SABS application was obliged to pay while disputing coverage

Pursuant to Statutory Accident Benefits regulatory scheme, first insurer to receive application for statutory accident benefits (SABS) following accident pays them, provided there is some connection between claimant and insurer. If insurer takes position another insurer is responsible for SABS, it must give notice within 90 days; insurers then follow statutory scheme of arbitration to determine which insurer should pay. SS rented vehicle from “Wheels 4 Rent” insured pursuant to motor vehicle liability policy issued by Zurich. Chubb issued accident policy to Wheels 4 Rent which provided optional death and dismemberment insurance to Wheels 4 Rent customers, but contained no coverage for motor vehicle accident liability. SS did not purchase Chubb’s optional coverage. Following single vehicle motor vehicle accident, she submitted SABS claim to Chubb, having received pamphlet from Wheels 4 Rent. Chubb refused to pay. Zurich paid SABS and insurers submitted dispute to arbitration, agreeing that liability depended on whether Chubb was insurer within meaning of s. 268 of Insurance Act (Ont.). Arbitrator held Chubb not “insurer” for purposes of priority dispute settlement statutory regime as insufficient nexus between Chubb and SS since Chubb never issued motor vehicle liability policy to either Wheels 4 Rent or SS. Zurich’s appeal allowed, but Chubb’s appeal to Ontario Court of Appeal also allowed. Majority of Court of Appeal held application judge erred in concluding Chubb policy was motor vehicle liability policy as no element of that policy insured against liability to others arising out of damage or injury caused by automobile or use or operation thereof. Justice Juriansz in dissent, held that applying established “nexus” test, Chubb, as first insurance company to receive completed SABS application, was obliged to pay while disputing coverage. Legislature could not have intended regulation would apply to insurers that do not offer motor vehicle liability policies to public but Chubb regularly writes motor vehicle liability policies and not “non-motor vehicle liability insurer” in broad sense. SS’s choice to send application to Chubb not random or arbitrary. Public policy to provide timely delivery of benefits would be seriously eroded by allowing insurance company that writes motor vehicle liability policies to argue, in case in which nexus test satisfied, that it is non-motor vehicle liability insurer. Zurich’s appeal to Supreme Court of Canada allowed. Supreme Court of Canada agreed with dissenting reasons of Justice Juriansz.

Zurich Insurance Co. v. Chubb Insurance Co. of Canada (Apr. 17, 2015, S.C.C., Abella J., Rothstein J., Cromwell J., Karakatsanis J., Wagner J., Gascon J., and Côté J., File No. 36002) Decision at 239 A.C.W.S. (3d) 997 was reversed.  251 A.C.W.S. (3d) 488.

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