If an insurance company does not have a valid reason for terminating an insurance contract, the contract may still be in force even if the insured has been advised of the termination.
The Plaintiff and Defendant disagreed about which of them was obligated to pay accident benefits to a man injured in a motor vehicle accident. The Court found that the Defendant was responsible for paying the accident benefits, because the policy was in force at the time of the accident and there was no valid reason to terminate it.
Here is the citation: Canada (Minister of Finance) v. Progressive Casualty Insurance Co. of Canada  O.J. No. 1769. Ontario Superior Court of Justice. D.M. Brown J. May 7, 2007.
Here is a link to the decision.
The Motor Vehicle Accident Claims Fund (the "Fund") brought an action claiming that Progressive Casualty Insurance Co. of Canada ("Progressive") was obligated to pay accident benefits to Cuong Ngo, a passenger injured in a motor vehicle accident. Huu Thag Nguyen ("Mr. Nguyen"), the driver of the vehicle, died in the accident. Progressive had issued an automobile policy to Mr. Nguyen effective April 22, 1997. The monies in payment of the premiums were to be withdrawn by electronic funds transfer on the 22nd day of each month. Mr. Nguyen’s bank subsequently advised Progressive that it would not process the May 22nd payment. Progressive then sent Mr. Nguyen a notice of cancellation advising that unless he paid the sum of $339.76 by June 18, 1997, the policy would be cancelled. No monies were received, and Progressive cancelled the policy as of that date, and issued a cheque to Mr. Nguyen for $44.46 on July 8, 1997 representing a refund of the premium overpayment. The motor vehicle accident occurred on August 11, 1997.
Progressive argued that the Fund was unable to bring the action on the basis that the Dispute between Insurers Regulation, Reg 183/95, applied. The court found that it had jurisdiction to decide this case based on Allstate Insurance Co. of Canada v. Motor Vehicle Accident Claims Fund, No. 292 (C.A.) that changed the law on whether the Fund was an insurer on the eve of trial.
The Court found that the Fund bore the burden of demonstrating the Progressive policy was in force on August 11, 1997, but that Progressive also bore the burden to show that its purported termination was in accordance with the applicable statutory conditions. The Court found that Progressive attempted to remove the funds from Mr. Nguyen’s bank account one day later than was agreed to, and this constituted a breach of the agreement on the part of Progressive. Accordingly, Progressive had no basis to issue a notice of cancellation, and the policy was in force at the time of the motor vehicle accident.