Insurance In Ontario

Insurance in Ontario

The low levels of insurance carried by many drivers in the US is often an issue after a serious cross border accident involving a driver from the US and a person from Ontario. In Ontario, an injured person may commence a tort claim against an at-fault American driver. The at-fault American’s own insurance company will then defend him or her under the third party liability provisions of the policy. Of special note to Americans injured by an at-fault driver from Ontario, the statutory minimum limit for third party liability in Ontario is $200,000 but most policies typically have in place at least $1,000,000. This amount may be adequate compensation in many cases.

However, what happens if a person from Ontario is injured by an American who has no insurance or is inadequately insured? The insurance scheme in Ontario has two mechanisms for dealing with such scenarios: 1. Uninsured / Unidentified Motorist coverage under s. 265 of the Insurance Act (“s. 265”) and 2. Coverage pursuant to the optional OPCF 44R Family Protection Endorsement (“OPCF 44R”).

1. The Uninsured / Unidentified Motorist – S. 265 of the Insurance Act
All auto policies in Ontario have this coverage for injuries caused by uninsured and unidentified motorists. This is mandatory coverage. Of import to cross border cases, U.S. insurers that have filed a Power of Attorney and Undertaking are bound by the Ontario automobile insurance regime. This means that a US insurance company that has filed a PAU is required to furnish this type of coverage to American drivers while they are operating motor vehicles within Ontario.

In the event that a person is injured in a motor vehicle accident involving an American at-fault motorist who is uninsured, the injured person may commence an action against his or her own insurance company claiming compensation under s. 265. The usual burdens, rules and time limits apply to this claim. An additional obligation to report the accident to the police exists in the case of an unidentified driver. The two year limitation period runs from the time the insured knew, or ought to have known, that the driver of the other vehicle was uninsured.

There are two key limitations on uninsured coverage under this scheme. The first is that it is subject to a maximum limit of $200,000. That is, under no circumstance will more than $200,000 be paid. This is one of the critical reasons why we must sort out the insurance scheme as early as possible. A second key limitation is that the insurer shall not be liable to make a payment under s. 265 where the insured “is entitled to recover money under the third party liability section of a motor vehicle liability policy”.

In other words, s. 265 compensation is only possible where no other motor vehicle liability policies are available to compensate the person from Ontario. Thus s. 265 benefits cannot fill the gap where there is insurance that exists but in adequate to compensate. So, if an injured person from Ontario can collect even a single dollar from the insurer of an at-fault American driver, he or she will not get s. 265 benefits.

This may cause problems for Ontario drivers injured by a driver from the US, as the low insurance in many American States, while valid and collectible, will vitiate s. 265 compensation. Thus, the second layer of protection that may be available to drivers in Ontario may be a better choice.

2. The Inadequately Insured Motorist – OPCF 44R Family Protection Coverage
This is an optional form of coverage that many people in Ontario have. It is designed to take over where s. 265 coverage leaves off. The face value of this coverage, typically $1,000,000, determines the amount of available coverage. The OPCF 44R is considered excess to any other valid motor vehicle policy. So, for example, if an insured is injured by an at-fault American driver with third party liability limits of $50,000 and the face value of the OPCF 44R is $1,000,000, the maximum entitlement would be $950,000.

The OPCF 44R does not stack with the $200,000 available under s. 265. Thus the maximum that can be recovered is the face value of the coverage.

The OPCF 44R provides coverage to any “eligible claimant”. Only individuals that meet the definition of “eligible claimants” can get compensation. This may mean, for example, that some passengers have no claim. We will sort out the relationships of any injured parties and determine if they meet the definition.

One positive aspect of OPCF 44R coverage, is that it follows the named insured and his or her family, and does not limit itself to a specific vehicle. So a person with this coverage who is a passenger in a vehicle not his own (such as a rental car in the US) would look to his own OPCF 44R for coverage in the event of an injury in that vehicle.

Finally, it is important, as always, to make a claim for this compensation within the appropriate time frame. Although the statute sets out a 12 month period in which to make a claim, a recent decision of the Court of Appeal in Schmitz v. Lombard General Insurance Company of Canada suggests the limitation period for bringing a claim under the OPCF 44R is two years in most cases. Moreover, this period only begins to run at the moment the insured has made a demand under the OPCF 44R and the insurer has failed to satisfy it. Nevertheless, it is prudent to file for this compensation as soon as possible as the case left several important questions open, such as the limitation period involving commercial policies.

As always, it is best to call us as soon as possible after a serious cross border accident.