Policy was cancelled before the accident
The Ontario Superior Court of Justice dismissed an insurance claim in a motor vehicle accident case, finding that the insurer provided a valid cancellation notice before the accident.
In Gallagher v. Todish et al., 2023 ONSC 4894, Pafco Insurance Company sent Tammy Todish a notice of cancellation of her automobile insurance for non-payment of her premiums. She took steps to pay her arrears and maintained her insurance for the next few months.
A few months later, Todish received another cancellation notice for non-payment of premiums. The cancellation date listed in the notice was October 13, 2014.
On November 25, 2014, Todish was in a read-end motor vehicle accident with Kellie Gallagher, who commenced a claim against Todish and her insurance company, Desjardins General Insurance Company.
Pafco brought a motion for summary judgment dismissing the third-party claims against it. Desjardins brought a cross-motion for summary judgment seeking a declaration that Pafco insured Todish at the time of the accident.
Pafco argued that Desjardins' claim for contribution and indemnity against it was not valid or sustainable because Pafco terminated its insurance policy in October 2014. Consequently, it was not in effect during the motor vehicle accident in November.
The Ontario Superior Court of Justice explained that on a motion for summary judgment, the court must be satisfied that no genuine issue requires a trial. There will be no genuine issue for trial where a judge can reach a fair and just determination on the motion's merits. Ultimately, the court concluded that it should decide the case through summary judgment.
The court noted that the right of an automobile insurer to terminate a contract is severely restricted and that the statutory conditions must be strictly complied with. Failure to comply with them keeps the insurer bound by the policy.
One of the main issues before the court was whether the insurance cancellation notice was deficient. If the notice was insufficient, Todish's insurance policy remained valid at the time of the accident.
Pafco argued that Todish knew it had cancelled the policy because she called to ask about a quote for insurance previously provided on the day of the accident. She did not defend her claim, and she has never challenged the termination on her own behalf.
The court noted that Todish had received the same cancellation notice in the past, and she clearly understood it because she had made payments and brought her account into good standing.
The court also noted that the notice of cancellation used the words "guaranteed funds" instead of expressly specifying three payment options—cash, certified cheque, or money order. There are tribunal decisions finding the terminations to be invalid because the cancellation letter failed to provide the three payment options. These cases determined that consumer protection is the basis for requiring the various payment methods to be set out in the notice.
However, the court was ultimately persuaded that the form of the notice of cancellation was not deficient because the term "guaranteed funds" encompasses all of these payment methods and is sufficient to inform an insured person of all of how they can pay.
The court further noted that the notice provided by Pafco did not include an address where Todish could pay. However, the court said that the fact that Pafco did not include an address in the notice did not render the notice deficient because Todish received the same notice a few months before the second notice. She understood what she needed to do to keep her account in good standing and prevent cancellation.
The court found that the notice set out the criteria to be met to retain insurance, the date by which this needed to be done and the contact information of the agency that could assist her in doing so. The court found no deficiency in Pafoc's notice that conflicted with the regulation's goal to protect insured people from unfair treatment by providing a phone number rather than an address.
Accordingly, the court concluded that Todish had no effective insurance policy at the time of the motor vehicle accident. As a result, the court granted the summary judgment dismissing the third-party claim.