ONSC: Excluded Driver is Not a Listed Driver for SABS Coverage

The Ontario Superior Court has held that an “excluded driver” under an auto policy is not a “listed driver” under the policy for the purpose of receiving accident benefits under the policy.

In Dominion v. State Farm, the claimant was a passenger in a State Farm vehicle when he was involved in a motor vehicle accident. He claimed accident benefits from Dominion.

Dominion insured his parents under a standard automobile policy. The claimant was identified on the Certificate of Insurance as one of the “drivers” on the policy. However, other parts of the Certificate identified him as being excluded from driving both of the described vehicles that were insured under the same policy. An executed OPCF 28A “Excluded Driver” Endorsement was attached to the policy.

Dominion denied that the claimant was an “insured person” under his parent’s policy and pursued a priority dispute against State Farm.

By way of background, section 3 (1) of the SABS defines “insured person”:

“insured person” means, in respect of a particular motor vehicle liability policy,

(a) the named insured, any person specified in the policy as a driver of the insured automobile and, if the named insured is an individual, the spouse of the named insured and a dependant of the named insured or of his or her spouse, [emphasis added]

(i) if the named insured, specified driver, spouse or dependant is involved in an accident in or outside Ontario that involves the insured automobile or another automobile, or

(ii) if the named insured, specified driver, spouse or dependant is not involved in an accident but suffers psychological or mental injury as a result of an accident in or outside Ontario that results in a physical injury to his or her spouse, child, grandchild, parent, grandparent, brother, sister, dependant or spouse’s dependant,

(b) a person who is involved in an accident involving the insured automobile, if the accident occurs in Ontario, or

(c) a person who is an occupant of the insured automobile and who is a resident of Ontario or was a resident of Ontario at any time during the 60 days before the accident, if the accident occurs outside Ontario;

In Warwick v. Gore Mutual Insurance (1997), the Court of Appeal held that only “insured persons” under the SABS are entitled to accident benefits. In other words, if a claimant does not meet the definition of “insured person” in the SABS under a particular policy, they are not covered under that policy for that loss.

In Dominion, the claimant was not involved in an accident involving the vehicles insured with Dominion, so the criteria under (b) did not apply. The accident happened in Ontario, so the criteria under (c) did not apply. With respect to the criteria under (a), he was not the named insured or spouse of a named insured or a dependant of a named insured or spouse. The question was whether he was specified in the policy as a driver of the insured automobile by virtue of being listed on the Certificate as one of the drivers on the policy, notwithstanding being excluded from driving any of the vehicles on the same policy.

At arbitration, State Farm relied on a prior decision (by the same arbitrator) named Pafco v. Cumis (2014), wherein the arbitrator held that the excluded driver claimant was an “insured person” because his name appeared on the Certificate in that case as a driver. Of note, the facts in Pafco were more or less the same as in Dominion.

Dominion argued that the Pafco decision was wrong because, although the claimant was specified on the Certificate of a driver, he was not specified as a driver of the insured automobile. If anything, he was specified as an “excluded” driver of the insured automobile, which failed to satisfy the definition of “insured person”.

The arbitrator framed the issue as follows:

Does the term “insured person” under section 3 of the SABS include an excluded driver having executed an OPCF 28A with respect to both vehicles insured pursuant to a policy of motor vehicle liability insurance yet shown on the face of the Certificate of Insurance as a “Listed Driver”?

The arbitrator agreed with State Farm, finding that the claimant was “specified in the policy as a driver”. The arbitrator also found that an individual executing the OPCF 28A would expect to be considered an “insured person” under that policy, given some of the wording on the Endorsement that purports to provide residual accident benefits to the excluded driver.

On appeal, the appeal judge disagreed with the arbitrator that an excluded driver under a policy is also a person “specified on the policy as a driver of the insured automobile”:

After a thorough review of the materials, the case law, the applicable legislation and the submission of counsel, I can find the arbitrator fell into error when he found [the claimant] to be an insured person in accordance with the SABS. The arbitrator concluded that because [the claimant] was listed in the Certificate of Insurance as a driver, he fell with the definition of an insured driver, despite being an excluded driver and was entitled to some insurance coverage. The legislation clearly states that an insured driver is one who is specified in the policy as a driver of the insured automobile. Despite being listed as a driver, [the claimant] was clearly not a driver of an insured automobile and thereby not entitled to coverage.

I find that [the claimant] was no (sic) specified on the policy as a driver of the insured automobile. He was not an insured person and the arbitrator erred by a finding that he was.

Following the Dominion case:

1. SABS entitlement under a policy for any given loss turns on whether the claimant is an “insured person” under the policy, pursuant to the definition of “insured person” under section 3 (1) of the SABS.
2. The Pafco v. Cumis decision is no longer applicable, as the Superior Court has essentially overruled it in the Dominion

It is important to remember though that an excluded driver can still have recourse against the policy that excludes him/her if they otherwise meet the definition of “insured person” under the policy. For example:

1. If at the time of an accident the excluded driver is a passenger in a vehicle that she is excluded from driving, she could still claim recourse against that insurer as an “insured person” because she was an occupant of the vehicle involved in the accident (criteria (b) in the “insured person” definition”.
2. Likewise, an excluded driver husband of a named insured would have recourse against his spouse’s policy pursuant to criteria (a) in the definition of “insured person”. However, his benefits would be limited by the terms of the OPCF 28A if he was driving the vehicle that excludes him at the time of the accident (this is what the residual benefits in the OPCF 28A seek to protect).

See Dominion v. State Farm