ONSC ‘Permits’ Insured’s Coverage Request

The Superior Court has released a new decision on whether an insured violated a statutory condition in the standard Ontario Automobile Policy.

In O’Connell v. The Personal Insurance Company, the applicant’s girlfriend asked to borrow his vehicle, insured with The Personal, while she was moving a cat and some other items to a new apartment. While driving his vehicle, she was involved in an accident. It turned out that at the time of the accident, she was not authorized by law to drive a vehicle because she was driving alone and on a 400-series highway with only a G1 licence.

The evidence was that the insured and his girlfriend had been dating for roughly five months and the Applicant believed that his girlfriend had a valid driver’s licence. The basis for his belief was that he had seen her showing it to gain entry into bars and clubs when they would go out.

The girlfriend was examined under oath and testified that she did not tell the Applicant at any time prior to the day of the accident or in the immediate aftermath of it, that she only had a G1 driver’s license. Her explanation on discovery for not telling the Applicant about her class of license was that she was embarrassed that at age 23 she still did not have a full license.

After he received a Statement of Claim, the Applicant forwarded a copy of it to The Personal. The insurer denied a defence and indemnity on the basis that the Applicant had breached statutory condition 4(1) and section 1.4.5 of the OAP, both of which preclude an insured to permit someone else to drive the insured vehicle while they are not authorized by law to drive.

The Applications judge denied held that the insured did not violate the conditions. He found that the evidence failed to establish that the insured “permitted” his girlfriend to drive while she was not authorized to do so. He referred to jurisprudence that the word “permit” connotes knowledge, wilful blindness, or at least a failure to take reasonable steps to inform one’s self of the relevant facts. He wrote:

In this case the applicant insured and the driver were boyfriend and girlfriend and had been for some five months. That, in my view, is a relationship of trust. The applicant knew Ms. Smith had a license because he had seen her use that license as a means of official identification, and it looked no different than his own license. He had also been in a car when she was the driver, and had heard anecdotes involving driving. Very significantly she never informed him at any time pre-accident, including the day she borrowed the car, that her license had limitations. There is no evidence he had any basis to suspect that she would withhold that crucial information from him, and it would be reasonable for him, in their circumstances, to assume she would not do that.

The moral of the story is that insurers should ask their insureds – before an accident happens – to look twice at their significant others’ drivers licences.

See O’Connell v. The Personal Insurance Company, 2014 ONSC 1469 (CanLII)