To preserve priority an insurer must act quickly, time extensions may not be granted
The court upheld an arbitrator's decision finding that the First Insurer was not entitled to any extension of the 90-day period within which it was required to notify other insurers of any dispute over priority for payment of accident benefits to an injured cyclist. Cary Schneider wrote an interesting article on the importance of limitation periods in priorty disputes: Priorty Disputes and the Ninety Day Notice Period: No margin for error. The need for extreme diligence in this situation was also noted by Canadian Underwriter.ca: Insurer needed to inquire immediately in order to gain extensions beyond 90-days.
Echelon General Insurance Co. v. CGU Insurance Co. of Canada [2008] O.J. No. 2224 Ontario Superior Court of Justice T.P. Herman J. June 5, 2008
The claimant was involved in a cycling incident and suffered injuries for which he claimed accident benefits from the First Insurer. The First Insurer had insured the defendant motorist's vehicle. The claimant was a dependent of his father who was insured by the Second Insurer at the time of the accident. The First Insurer did not give notice to the Second Insurer, within the required 90 days of receipt of the claim for benefits, that it was disputing its obligation to pay statutory accident benefits to the claimant.
At an arbitration, the First Insurer took the position that the Second Insurer was responsible for the payment of benefits to the injured claimant under the policy of insurance issued to the claimant's father. The arbitrator refused to extend the 90-day notice period, finding accordingly that the First Insurer was responsible for payment of benefits. On appeal, the First Insurer argued that the Arbitrator incorrectly concluded that it should have contacted the Second Insurer or the Second Insurer's agent prior to the end of the 90-day period to find out whether the father of the claimant had an insurance policy. The First Insurer also argued that the arbitrator was incorrect in concluding that had the First Insurer followed up it "may well have determined" that the claimant was covered by the Second Insurer's policy.
The court concluded that the failure of the First Insurer to follow up with the Second Insurer after receiving notice of the claim for benefits was not reasonable. The language of section 3(2)(b) of the Ontario Mediation Regulation provides that the Insurer must carry out its investigations fully and expeditiously. This section focuses on the issue of whether the Insurer made "reasonable" investigations, not whether those investigations resulted in a correct determination of the availability of other insurance.
The court held that the arbitrator was not in error when he found that an inquiry by the First Insurer might have resulted in it finding out about the Second Insurer's policy, nor was the arbitrator in error in concluding that the First Insurer should have made such an inquiry. There was evidence before the arbitrator that the First Insurer had reason to question the representations of the claimant to the effect that there was no other insurance available, and, in these circumstances, it would have been reasonable for the First Insurer to conduct further investigations into the matter.
This case was originally summarized by sdavies@harpergrey.com and originally edited by dpilley@harpergrey.com
