Understanding Automobile Insurance in Ontario – Part III

Since June 1990 every Ontarian who has a valid automobile insurance contract in Ontario is entitled to accident benefits, as provided for in Statutory Accident Benefits Schedule, which is a regulation to the Insurance Act. All contracts of automobile insurance are deemed to provide for accident benefits.

NOTE: despite the above entitlement to accident benefits, occupants of public transit vehicles who are injured therein or as a result of its operation, are not entitled to accident benefits, if the public transit vehicle does not collide with another automobile or any other object in the incident. This section is often relied upon for denying payment to occupants of public transit vehicles such as TTC or Go Buses, resulting from sudden break or acceleration of those vehicles.

In some circumstances there may be more than one insurer available to pay accident benefits to a victim of a car accident. The insurance act sets out the rule in determining which insurer is liable to pay as follows:

  • If the injured person (occupant or pedestrian) has his or her own car insurance, then that insurer must pay accident benefits;
  • If recovery is not available for whatever reason through the person’s own insurance policy, then insurer of the vehicle in which the person was an occupant or the vehicle that struck the person would be liable to pay accident benefits;
  • If recovery is unavailable under above, then the injured person has recourse against the insurer of any other automobile involved in the accident;
  • If recovery is unavailable under above, the injured person has to claim accident benefits through the Motor Vehicle Accident Claims Fund.

If there are disputes between the insurer as to which one is liable to pay accident benefits, the insurer that received the application first is required to pay the victim his or her accident benefits and then proceed with a dispute if it wishes to do so. The insurance act provides for indemnification of any accident benefits paid by an insurer, in excess of the deductible amount of $2,000 from another insurer, in accordance with the degree of fault. In other words, if a person is injured in a car accident, through someone else’s negligence, the injured party’s own insurer is liable to pay accident benefits but then that insurer has the right to seek indemnification of all accident benefits paid over $2,000 from the at-fault party’s insurer.

Accident benefits insurance is excess insurance to any other insurance (not automobile insurance) that the person may have available to her. For example, if the injured person has any sort of group insurance policy through employment or private insurance policy, all of her claims (including those for medical expenses or income loss) must go through that insurance policy and any amounts not covered, could then be recovered through accident benefits portion of the applicable motor vehicle insurance policy.

The insurer is permitted by law to provide benefits, in addition to those provided for in the SABS. These are often called optional benefits.

In the case of a dispute between an insurer and insured with respect to the insured’s entitlement to accident benefits the amount of entitlement, any one of the said parties can apply to the License Appeal Tribunal (“LAT”) but cannot bring a proceeding in any court, except for an appeal from a decision of the LAT, in certain circumstances.

Insurers and insureds often settle accident benefit claims. However, such settlement must comply with certain rules and regulations, most notably those contained in regulation 664 under the Insurance Act, called “Automobile Insurance”. There is no rule against settling only part(s) of the claim. The said regulation outlines that unless the insurer gives to the insured and obtains the latter’s signature on a “written disclosure notice” with respect to the settlement, which is in a form approved by the Superintendent, the settlement may be rescinded by the insured at any time.

If the insurer has given and obtained insured’s signature on the written disclosure notice, the insured has two business days from the later of the day he or she signs the disclosure notice and the release, to rescind the settlement by delivering a written notice to the insurer and returning all monies received as consideration for settlement.

In certain circumstances the insured can rely on section 129 of the Insurance Act to claim relief from forfeiture, which basically means overlooking minor or imperfect compliance with some conditions of the contract.