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September 2019

Do priority provisions in s. 268 of the Ontario Insurance Act apply to an out-of-province insurer for an accident that took place in Ontario?

Case Study: Coseco v. Liberty, 2019 ONSC 4918

Van Krkachovski
Van Krkachovski
Partner

Egi Troka
Egi Troka,
Articling Student

By Van Krkachovski and Egi Troka

Where an MVA occurs in Ontario, and there is an out-of-province insurer policy covering the claimant, and that insurer has signed the Power of Attorney and Undertaking (PAU), the insurer is bound by s. 268 of the Insurance Act in its entirety.

GMAC Insurance Company issued a New York motor vehicle insurance policy to the claimant who resides in the State of New York. GMAC is not licensed to sell insurance in Ontario. The claimant was involved in an accident in Toronto on July 4, 2015. The car in which he was a passenger was insured by an Ontario insurer, Coseco Insurance Company. Liberty Mutual Insurance Company insures the spouse of the claimant with a New York State automobile insurance policy.

The claimant applied to Coseco for statutory accident benefits under the Statutory Accident Benefits Schedule (SABS). Coseco paid statutory accident benefits and started an arbitration to determine the priority pursuant to s. 268 of the Insurance Act.

The arbitrator determined the priority provisions in s. 268 of the Insurance Act applied so GMAC appealed. Both Coseco and Liberty Mutual argue that the Arbitrator's decision should be upheld.

Since the MVA occurred in Ontario, a US insurer, Liberty Mutual, that an executed power of attorney and undertaking, must attorn to Ontario law and jurisdiction.  Otherwise, a GMAC-insured vehicle which struck an Ontario pedestrian (without insurance) would result in GMAC rejecting the application for accident benefits on the basis that the Ontario SABS were not applicable to it. This would lead to the Ontario pedestrian relying on the government system, which was not the policy behind the Accident Benefits legislation.

The Superior Court determined that the standard of review is reasonableness.1 The arbitration concerned a priority dispute, not an exceptional circumstance warranting a correctness standard. The fact that the case involved more than one jurisdiction and that the Arbitrator's decision results in the Ontario legislation having extra-jurisdictional effect does not make it a constitutional issue (where the standard of correctness is used). GMAC intends to appeal to the next level.

Read the previous recent Case Study.


  1. Intact Insurance Co v. Allstate Insurance Co. of Canada, 2016 ONCA 609, 131 O.R. (3d) 625, at para. 53

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