The Insurer of a Defendant driver who settled with the Plaintiff sought indemnification from the Insurer of the Defendant driver’s employer. The Court found that s. 277(1) of the Insurance Act, R.S.O. 1990, c. I.8, applied to establish priority between the Defendant driver’s "owner’s policy" which was "first loss" insurance and the Defendant employer’s "non-owner’s policy" which was excess insurance only.
This was the trial of a dispute between motor vehicle insurers that arose after a settlement by one insurer with the Plaintiff, Patricia Trainor. The Defendant, Aaron Barker, was a minor who lived with his parents and was employed at Burger King. Aaron’s father, the Defendant, Gary Barker, allowed his son to drive the family car to work and, during the course of his employment, Aaron Barker negligently collided with the vehicle driven by the Plaintiff. The Barker’s Insurer, Coseco Insurance Company ("Coseco") settled with the Plaintiff by paying her $312,000 and received, by assignment, her claim against QSC Inc., the Defendant company that owned the Burger King franchise ("QSC"). Coseco sought reimubursement from QSC’s insurer, the Halifax Insurance Company ("Halifax").
Liability was imposed by the Court on the Barkers and on QSC. The Court found that Coseco insured the Barkers under a valid "owner’s policy" and that QSC was insured under a valid "non-owner’s policy" by Halifax.
The issue for the Court to decide was whether s. 277(1) of the Insurance Act applied to establish priority between an "owner’s policy" and a "non-owner’s policy". Section 277(1) of the Insurance Act essentially provides that insurance determined to be an "owner’s policy" is a "first loss" insurance in respect of liability arising from or occurring in connection with, the ownership or use or operation of an automobile owned by the insured and that insurance attaching under any other valid motor vehicle liability policy is excess insurance only.
The Court found that s. 277(1) of the Insurance Act applied to establish priority. The language of s. 277(1) clearly provides that in this circumstance, the primary policy is the Coseco policy and the Halifax is excess insurance only. The limits of the Coseco policy were sufficient to cover the loss and there was therefore no need to call on the Halifax policy for indemnification.