Law Times

Law Times • May 11, 2015 Page 11 www.lawtimesnews.com The pitfalls of adding, deleting auto insurance coverage By Judy van rhiJn For Law Times or drivers who like to downgrade their poli- cies during long absences or beef up their policies from the basic model, there are concerns the changes may not leave them adequately covered in the event of an accident. A recent case on the subject, Eco- nomical Mutual Insurance Co. v. State Farm Mutual Automobile Insurance Co., that's heading for appeal confirms the confusion in the area. Mark MacNeill, a partner at Brauti Thorning Zibarras LLP, says it's a sad day when people who think they have insurance get in an accident and the com- pany denies their claim. "This is what people need to consider when they are adding and delet- ing coverage on their vehicles," he says. In the Economical Mutual Insurance case, the applicant, Shilan Hasan, and her husband had reduced her insurance prior to departing for Iraq. While it was the client's in- tention to maintain coverage until her departure date, the broker reduced the coverage about 20 days earlier. In the in- tervening period, her husband suffered a serious injury in an accident while they were bor- rowing a friend's vehicle. Arbitrator Scott Densem found that while there was no duty on the woman to main- tain accident-benefit coverage by way of Form OPCF-16, there was an obligation on the broker to explain that option. The evidence was clear the woman wouldn't have pur- chased this insurance even if the broker had advised her of it, so the negligence wasn't causal. However, the arbitrator then went on to find that if the broker had raised this option, a fuller conversation would have fol- lowed in which it was likely the misunderstanding about the departure date would have be- come apparent. He then found this was the causal link and found Economical Mutual In- surance liable. The decision then came be- fore the Superior Court. "Both the arbitrator's decision and that of Justice [Thomas] Lederer are interesting," says MacNeill. "Arbitrator Densem basi- cally said that the broker fell short of his duty to fully explain the options open to Hasan. He went on to find that had Hasan gone through those options, there would have been a meet- ing of the minds as to when she was actually going to depart for Iraq. Justice Lederer was very critical of Densem's approach of inferring things from a conver- sation that did not actually take place. However, he did not think that Economical met the test for a palpable and overriding error which would have enabled him to grant the appeal." In fact, Lederer said: "In my mind, there is a considerable measure of speculation in the train of thought ref lected in the suggested conversation as de- picted in the reasons of the Ar- bitrator. Is this enough to allow for a finding that Economical is responsible for the statutory ac- cident benefit claims that have been made by Shilan Hasan and her husband?" The judge found that to ac- cept that position would have required a departure from tra- ditional principles of causation. "Left to myself, I would grant the appeal," he wrote. "To me, causation cannot be confirmed by reliance on infer- ences proclaiming the details of a conversation that did not take place, which is dependent on assuming a premise that did not occur (the broker providing proper information of the op- tion presented by OPCF 16)." Lederer, however, felt bound by deference to the arbitrator's decision. "The interesting part of it is that the Court of Appeal finds that there is something worth hearing here," says MacNeill, pointing out that while the arbi- trator didn't believe there was a requirement to use the OPCF-16 form when reducing the cover- age, he still found the broker still had an obligation to canvass the option. "The question is whether the Court of Appeal is going to take issue with that or simply find that Justice Lederer was incor- rect that he had legal grounds to actually grant the appeal." James Greve of Camporese Sullivan Di Gregorio, who rep- resents State Farm, confirms the matter will go forward in June. "As the party that has prevailed, I hope the case will be about def- erence," he says. Miller Thomson LLP's Daniel Strigberger, who represents Eco- nomical Mutual Insurance, ex- pects that to be the case. "I haven't received State Farm's materials yet, but I expect the ap- peal will focus on the deference afforded to an arbitrator," he says. If appeal court upholds the notion of deference to the arbi- trator, Strigberger expects the parts of the lower court decision relating to the insurer's duty to advise will stand. MacNeill agrees. "No matter what happens, I think the principle here will be in line with Lederer's quote: 'The policy proposition is to keep this determination straight-for- ward.' There can be no doubt in my mind that brokers are going to be held to their duty to fully explain things to consumers. The people of Ontario are com- pelled to buy auto insurance. Insurance is expensive and complicated and as such is very regulated." The question remains as to what people can do to protect themselves when reducing their coverage. "If I was advising a client about getting, modifying or cancelling coverage on their own policy, I would tell them that they should document all interactions with their broker and confirm instructions in writing," says MacNeill. "With today's technology, it is very easy to do so. E-mail and faxes create a permanent re- cord. In the case of Ms. Hasan, I would have recommended she send an e-mail to the broker say- ing: 'I confirm that I am leaving for Iraq on such and such a date and that nobody will be driving my car between that date and when I return on such and such date. Please make sure I am fully covered for any risks, but at the same time, I would like to save on my premium if I am not go- ing to be driving it during those dates.'" LT FOCUS What do your clients need? The means to move on. Guaranteed. ™ Baxter Structures customizes personal injury settlements into tax-free annuities that can help your clients be secure for life. » Pre- and post- settlement consultation and support » Caring professionalism for over 30 years » No fee to you or your clients Need more information? Contact us at 1 800 387 1686 or baxterstructures.com Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES Baxter_LT_Oct7_13.indd 1 13-10-01 4:03 PM F

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