Accident Benefit coverage upheld

There has been a recent ruling in the Ontario Superior Court regarding accident benefits. It has been determined that an Ontario motor vehicle liability policy is responsible for paying accident benefits even if the language of the policy makes no reference to accident benefits coverage being available to the lessee of the vehicle or makes no premium allowance.

The case is Ontario (Finance) v. Daimler Chrysler Insurance Company. Richard Goodridge leased a 2003 Mercedes-Benz S500V. The lease agreement was with Daimler Chrysler Services Canada Inc. (DCSC).

Part of the lease agreement was a requirement for Goodridge to obtain insurance for the vehicle that had a minimal single occurrence bodily injury limit of $1 million. The coverage was placed with Optimum Insurance Company. As is standard practice, DCSC was named a lessor and an additional insured under the policy.

Optimum canceled it coverage on the Mercedes for non-payment. Then the vehicle leased by Goodridge struck a pedestrian in Toronto in 2003.

The Motor Vehicle Accident Claims Fund of Ontario is a public body that acts as a "payor of last resort," paid for the pedestrian's accident benefits. It then sought recovery from DCSC. This is often done by insurance companies. The person who has suffered damage or an injury is taken care of and the insurance company sorts things out behind the scenes.

DCSC disagreed that they were liable. They went to court and argued the policy precluded such accident benefit payments, based on the wording contained in the policy. What DCSC was referring to is that the policy does not cover a lessee. DCSC also argued that any premiums collected under its policy did not include premiums collected for accident benefits. They stated that the policy is limited to coverage only for any loss or damage "as a direct result of the lessee's failure to effect or maintain the automobile insurance required by the lease contract."

DCSC maintained that, "a policy that insures against 'liability arising out of bodily injury or death of a person or loss of damages to property caused by an automobile' is decidedly different from a policy that insures against 'loss or damage incurred by the insured as a direct result of a lessee's failure to effect or maintain automobile insurance.'"

Essentially, Daimler Chrysler argued, since the policy did not cover accident benefit, it was not a motor vehicle policy as defined by the Insurance Act.

The insurance answer is the court disagreed. The policy terms contained within the contract of insurance may be valid for determining disputed coverage issues. The terms did not lessen the status as a motor vehicle policy and motor vehicle policies include accident benefit.