Insurer Bound by Position on Priority

When an automobile insurer accepts priority for a statutory accident benefits claim, it is very difficult to withdraw or resile from that position except in extreme situations, such as when there is bad faith or deliberate misrepresentation.

In Pembridge Insurance Company v. The Sovereign General Insurance Company, 2019 ONSC 7291, the injured claimant submitted an application for accident benefits to Sovereign. Sovereign sent a notice to Pembridge indicating that Pembridge may be an insurer responsible for payment of the accident benefits claim.

Pembridge accepted priority for the claim. However, after receiving the accident benefits file, Pembridge realized that it may have accepted priority in error. Pembridge then sent a notice indicating that either Sovereign or another insurer was responsible to pay benefits.

The arbitrator held that Pembridge, having accepted priority for the claim, could not then pursue Sovereign.

Justice Kimmel dismissed an appeal by Pembridge. Justice Kimmel indicated that the arbitrator reasonably relied on a well-established line of cases which indicate that the policy objectives of priority disputes are simplicity and efficiency.

Pembridge’s agreement to accept priority rendered the claimant to be an insured person under Pembridge’s policy of insurance, and there was no need for the arbitrator to undertake a priority analysis on the merits.