Recently a columnist for another paper wrote about a dispute between an auto insurer and a travel insurer as to whose policy pays the indemnity. I decided to cover this same story for Epoch Times readers, as the topic is relevant to those who drive in the United States and who also buy travel insurance. I also wanted to include the facts that were omitted from the original story.
Both RBC Travel Insurance and AVIVA Canada Ltd (auto insurer) had issued policies to a policyholder who was injured in an accident in Michigan. RBC paid the emergency medical expenses, which exceeded $23,000. RBC considered their travel policy to be excess to the auto policy issued and they brought a motion for reimbursement of the expenses paid.
At the motion hearing, AVIVA took the position that both policies were primary and where this is the case, the medical expenses should be apportioned equally. RBC disagreed. As there was prior case law that had already considered the same facts and found in favour of the travel insurer, it was RBC's position that this should apply.
The motion's judge disagreed that the wording of the RBC policy was sufficiently clear to make them an excess insurer, and found that both policies were primary. He then considered section 268(6) of the Insurance Act which provides that auto insurance is, "excess to any other insurance not being automobile insurance of the same type indemnifying the injured person." He decided that based upon the Insurance Act, the AVIVA policy was the excess policy and that RBC was solely responsible for the medical expenses.
RBC appealed. In a unanimous decision, the Court of Appeal found that the motion's judge had erred. They stated that insurance policies, like any other contract, are to be interpreted based upon the plain and ordinary meaning of the language used and the RBC policy language was sufficiently clear to support that it was excess. Where this is the case, the Insurance Act does not apply.
The Justices also pointed out that in the original motion AVIVA had taken the position that both policies were primary. It was only at the appeal that AVIVA asserted that the motion's judge had correctly applied the Insurance Act, and that they should be considered excess. The Court of Appeal specifically found this change of position to be of interest.
This statement was not included in the original story. Instead, it was that columnist's opinion that this case was a reminder that the Insurance Act is not doing the job of holding down the cost of auto insurance, at the expense of other insurance. He also wrote that AVIVA had not yet decided if they would appeal the decision to the Supreme Court of Canada. While AVIVA may make public statements to the contrary, it is highly unlikely that they will appeal a case where they switched their argument mid-stream or that the SCC would have any interest in the issue.
It was further quoted that the Ontario Chapter of the Insurance Bureau of Canada had tried and failed to lobby for an amendment to the legislation to provide more certainty about which coverage pays first. According to the IBC, certain policyholders would pay lower rates if insurers could ask them if they had other plans, such as discounts offered to professional groups where such plans are presumed to exist.
Consider how this might work. Auto insurers would have to review each individual policyholder's plan to determine what discount might apply, and then they would have to monitor any change in employment status to ensure that the discount was still warranted. Doing this can only raise the cost of auto insurance as well as increase disputes between insurers and their policyholders.
The bottom line, readers should never accept any statements about the insurance industry at face value. There's always more to the story.
Susan Saksida, CIP is an insurance consultant who has held senior positions within the insurance companies and brokers. She is currently conducting research into the root cause of consumer misunderstanding of the insurance industry. If you have an auto accident related story please email this to insurancecompliancematters@rogers.com .
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