Republished with permission from the Insurance Brokers Association of Alberta’s magazine – The Alberta Broker (December 2019)
To the layperson, the equation is often simple: “Automobile insurance coverage applies to automobile accidents, so if I’m in an accident involving an automobile, I will have insurance coverage”. However, for those working in the insurance industry, we know that the equation is actually much more nuanced—we ask: “What is an ‘automobile’ exactly, and what qualifies as an ‘accident’?” In reality, the nuanced semantics of insurance coverage can make simple algebra look a lot more like complicated calculus.
The Ontario Court of Appeal’s decision in Benson v Belair Insurance Company Inc[1] is a case in point. The Court simultaneously decided two related appeals involving Ontario residents who were involved in catastrophic accidents while using off-road vehicles outside of Ontario.[2] The first appeal involved an all-terrain vehicle (“ATV”) accident in British Columbia. The second appeal involved a dirt bike accident in Georgia, USA. In this case, the Court was asked to trace the definitions of both “accident” and “automobile” to assess the insureds’ entitlement to statutory accident benefits (“SABs”) under Ontario’s Statutory Accident Benefits Schedule (the “SAB Regulation”) in relation to the out-of-province accidents on these off-road vehicles.
Ultimately, the Court of Appeal held that the injured parties were entitled to SABs, as both of the off-road vehicles were “automobiles” involved in an “accident” within the meaning of the SABS Regulation.
The Facts
In the first case, Austin Benson (“Mr. Benson”), was a resident of Ontario who was living in British Columbia. On June 23, 2013, he was a passenger on an ATV that was owned and operated by a British Columbia resident. While riding on a public trail, Mr. Benson fell off the ATV and suffered a severe brain injury. At the time of the accident, he was a named insured on an automobile policy issued by Belair Insurance Company Inc (“Belair”). The ATV was not listed as an insured vehicle on Mr. Benson’s insurance policy.
Subsequently, Mr. Benson applied for SABs in Ontario. Belair denied coverage on the basis that the accident occurred in British Columbia and that the question of whether the ATV was an automobile for Ontario accident benefits purposes was to be determined under the laws of British Columbia. Unlike Ontario, British Columbia law does not require ATVs to be insured as a motor vehicle, and applying the law of the land where the accident occurred, the past adjudicators determined that there was no coverage for the off-road vehicle. Mr. Benson appealed.
In the second case, Christopher Perneroski (“Mr. Perneroski”), a resident of Ontario, was tragically injured while riding his insured dirt bike on a closed track at a sports resort in Georgia. Like Mr. Benson, he submitted a claim for SABs, which Echelon General Insurance Company (“Echelon”) denied on the basis that the incident was not an “accident” as defined by the SABS Regulation because the dirt bike did not constitute an “automobile”. A motion judge found that the dirt bike was an “automobile” under the Insurance Act and that, if the accident had occurred in Ontario, Mr. Perneroski would be entitled to receive SABs. The motion judge found that Mr. Perneroski’s entitlement persisted notwithstanding that the accident was outside of Ontario. Echelon appealed.
The Law
Part VI of Ontario’s Insurance Act governs automobile insurance. The provision of SABs in every motor vehicle liability policy is mandated by s 268(1):
Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.[3]
Although different versions of the SABS Regulation applied to Mr. Benson and Mr. Perneroski based on the dates of the incidents,[4] both versions defined “accident” as follows:
“accident” means an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device.[5]
At the time of both incidents, the SABS Regulation clearly provided coverage for accidents to an insured person whether the accident occurred within or outside Ontario.
Given that the insureds receive benefits for accidents arising from the use or operation of an “automobile”, the Court then had to look at the definition of “automobile”. Since the SABS Regulation did not specifically define “automobile”, the Court relied upon case law which established a three-part test for determining whether a particular vehicle was an “automobile” for the purpose of this legislation. The test asked:
- Is the vehicle an automobile in ordinary parlance?
- If not, is it defined as an automobile in the wording of the insurance policy?
- If not, does the vehicle fall within any enlarged definition of automobile in a relevant statute?
The parties accepted that neither a dirt bike nor an ATV is considered to be an automobile in ordinary parlance and that they were not defined as automobiles in the applicable policies. As such, the issue was whether the dirt bike and ATV fell within the enlarged definition of automobile in the Insurance Act.
Section 224(1) of the Insurance Act defines “automobile” for the purpose of the part as: “a motor vehicle required under any Act to be insured under a motor vehicle liability policy”.[6] Further, the parties agreed that dirt bikes and ATVs fell within the definition of “off-road vehicles” under the Off-Road Vehicles Act and that s 15(1) applied:
15 (1) No person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy in accordance with the Insurance Act.[7]
As such, the parties agreed that, if the accidents had happened in Ontario, the two injured parties would be entitled to SABs because s 15(1) of the Off-Road Vehicles Act required that the two off-road vehicles be insured, fitting them within the extended definition of “automobiles” in s 224(1) of the Insurance Act. The point of contention was that this same insurance requirement did not apply in either British Columbia or Georgia where the accidents occurred. Thus, the Court had to decide whether the lex fori (the law of the forum, i.e. Ontario) or the lex loci delicti (the law of the place where the delict was committed, i.e. British Columbia and Georgia) applied to the issue of coverage.
The Ontario Court of Appeal held that the law of Ontario governed and that it was an error to look to foreign law to interpret the phrase “any Act” in s 224(1), which should be properly read as “any [Ontario] Act”. Since there was no language that limited coverage to accidents occurring in Ontario, the Court found that “the provisions that dictate the result for Ontario incidents dictate the same result for incidents that take place outside Ontario that are covered under the automobile insurance policy”.[8] The Court held as follows:
To conclude, I am satisfied that when considering the extended definition of automobile, the circumstances to be considered are those mandated by the relevant statutory provisions that state when a vehicle is required to be insured under a motor vehicle liability policy. As a definitional mechanism, the provisions are applicable to any incident for which SABs may be payable in the same manner, regardless of where the incident occurred within the geographical coverage area of the relevant Ontario insurance policy.[9]
As a result, both Mr. Benson and Mr. Perneroski were entitled to SABs for their out-of-province off-road vehicle accidents.
The Take-Away
This case, like many others, demonstrates the rigorous semantic exercises that can be required to assess coverage. Moreover, the principle of the decision will demand that insurance professionals be attentive to ways in which insureds may receive ‘extended’ coverage by virtue of the interplay of overlapping statutory and policy definitions. As we see here, an insured under the SABs Regulation is entitled to coverage for accidents in their automobile or another automobile. Even if an accident occurs in an off-road vehicle, it is included in the expanded definition of automobile by virtue of s 224(1) of Ontario’s Insurance Act. These provisions apply to all accidents, regardless of whether the accident occurs outside of Ontario. Although the Benson decision widens the territorial from which claims may come, its analysis does permit some certainty in risk assessment for insurers and avoids the difficulty of calculating payouts based on the law of the jurisdiction of the accident.
SABs coverage is created by the SABS Regulation, so
insurers must note that they cannot simply change their policies to contain
this risk. Insurers will need to be
aware of this risk when they assess the applicable premiums to charge to all
automobile policies until such time as the legislation is amended.
[1] 2019 ONCA 840 [Benson CA]. The lower court decisions were Austin Benson v Belair Insurance Co Inc, 2018 ONSC 2297 and Perneroski v Echelon, 2019 ONSC 1415, respectively.
[2] Both appeals were reported in Benson CA, ibid.
[3] Ibid at para 17.
[4] The Statutory Accident Benefits Schedule – Effective September 1, 2010, O Reg 34/10 applied to Mr. Benson, and the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, O Reg403/96 applied to Mr. Perneroski.
[5] Emphasis added.
[6] Benson CA, supra note 1 at para 28 (emphasis added).
[7] Emphasis added.
[8] Benson CA, supra note 1at para 37.
[9] Ibid at para 49.
