Fridays with Rogers Partners
At our weekly meeting, Pip Swartz discussed the recent decision in Johnson v. Jevco, 2021 ONSC 4870. This case concerned an appeal of a decision made by the License Appeal Tribunal (“LAT”), finding that the applicant/respondent was entitled to statutory accident benefits (“SABs”) as he was insured at the time of his accident under a policy of motor vehicle insurance.
Facts
The respondent to this appeal, Jacob Johnson, suffered an accident involving his newly acquired motorcycle. Johnson purchased this motorcycle on July 5, 2016, and was in an accident 11 days later (on July 16, 2016).
At the time of the accident, Johnson had insurance coverage from Jevco (the appellant) for another vehicle he owned.
5 days after purchasing the motorcycle, Johnson contacted Jevco and asked whether his motorcycle was covered under his insurance policy. Jevco told him no; their company did not ‘underwrite motorcycle insurance’.
Following the accident on July 16th, Johnson sought SABs from Jevco. Jevco denied Johnson many of the benefits he applied for on the basis that Johnson was operating the motorcycle without insurance contrary to section 31 of the Statutory Accident Benefits Schedule.
Johnson argued that he was entitled to benefits, as the motorcycle was insured under section 2.2.1 of the standard Ontario Automobile Policy (the “OAP 1”), an insurance contract which Johnson and Jevco had entered into.
Section 2.2.1 of the OAP 1 states that “newly acquired automobiles” are insured under the policy if the insured individual insures all of his or her motor vehicles with the same insurer, provided that the insured notifies the insurer within 14 days of delivery of the new vehicle, and pays any additional premium required.
Issues
There were two central issues discussed in this decision. The first issue was whether or not Johnson’s motorcycle qualified as a “newly acquired automobile” as per the OAP 1’s definition of “automobile”.
The second issue was whether Johnson was covered by his existing insurance with Jevco at the time of his accident, given that he had not given notice of his acquisition of the vehicle to Jevco within 14 days and had not paid any additional insurance premium.
The LAT had answered both questions in the affirmative. On appeal, the Ontario Superior Court of Justice upheld the LAT’s decision, and dismissed Jevco’s appeal.
The Motorcycle was a “Newly Acquired Automobile”
On the first issue, the definition of “automobile” as used in the OAP 1 was discussed. Under the Highway Traffic Act[1], both automobiles and motorcycles fall under the umbrella term of “motor vehicle”, thus implying that not all motorcycles are automobiles. However, under the Compulsory Insurance Act,[2] motorcycles qualify as automobiles because they must be insured.
Jevco argued that because they do not underwrite motorcycle insurance as a company policy, Johnson’s motorcycle could not have been covered under its policy. The Court dismissed this argument, saying that Jevco’s internal company policy was irrelevant to the interpretation of their contract with Johnson. The Court decided that Johnson’s motorcycle qualified as a “newly acquired automobile,” and was therefore covered under the Jevco policy.
The Motorcycle was Covered Despite the Lack of Notice and Additional Premium
On the second issue, Jevco argued that because Johnson did not give Jevco notice of the newly acquired motorcycle within 14 days of its acquisition, or pay any additional insurance premium, the motorcycle was not covered as a “newly acquired automobile”.
The Court found that Johnson’s existing insurance policy automatically covered newly acquired vehicles for a 14 day grace period, and that notice of the acquisition of the new vehicle, and payment of an additional premium, was only required in order to extend coverage beyond those 14 days. The Court held that the motorcycle was accordingly covered at the time of the accident, as the accident had occurred within 14 days of the acquisition of the motorcycle.
Takeaways
This case illustrates a situation in which an insurance company is required to provide coverage for a type of vehicle that, according to its company policy, it does not ordinarily provide coverage for. This case underscores the importance of companies understanding the details and nuances of their contracts.
Further, this case stands for the proposition that a motorcycle can fall within the definition of a “newly acquired automobile” under the OAP 1, and that coverage is automatically extended to newly acquired automobiles under the OAP 1 for 14 days even without notice of the new vehicle to the insurer, or payment of an additional premium.
[1] Highway Traffic Act, R.S.O. 1990, c. H.8, s.1(1)
[2] Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, s. 2(1)