Priorities under Insurance Act depended on existence of coverage

Insurance – Automobile insurance – General principles

P was involved in car accident while driving rental car owned by applicant. P was living with her parents and was “listed driver” under standard Ontario Automobile Policy issued to her father by respondent insurer. Policy covered two vehicles that she drove regularly. She was not “named insured” on father's policy. P was named as defendant in action arising from accident. There was priority dispute as to whether applicant's insurer or respondent was “first loss” insurer. Applicant and respondent entered into reservation of rights agreement pursuant to which applicant agreed to defend P in action until priority dispute was resolved. Action settled, and applicant paid $30,000.00 towards settlement on behalf of P. Applicant sought $30,000.00 plus $17,483.00 in legal fees from respondent, resuming its claim that respondent was first loss insurer. Application judge dismissed applicant's claim. Decision was upheld on appeal. Applicant appealed. Appeal dismissed. Priorities under Insurance Act depended on existence of coverage under policy of insurance, and in this case no coverage was available to P under policy issued by respondent. Responsibility to provide coverage fell to applicant's insurer under s. 277(1.1)(3) of Act.

Ontario Corporation Number 1009329 (Enterprise Rent-A-Car) v. Intact Insurance Company (2019), 2019 CarswellOnt 18873, 2019 ONCA 916, Paul Rouleau J.A., Grant Huscroft J.A., and I.V.B. Nordheimer J.A. (Ont. C.A.); affirmed (2018), 2018 CarswellOnt 8991, 2018 ONSC 3517, Morawetz R.S.J., Gordon R.S.J., and Conway J. (Ont. Div. Ct.).

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