The Ontario Court of Appeal released a new decision in Benson v Belair Insurance Company Inc. which affirmed that an insured may be entitled to Statutory Accident Benefits when injured in an off-road vehicle accident, even where the accident occurs in a jurisdiction which does not mandate insurance coverage for these vehicles. The decision is summarized and discussed below.

The Facts

Mr. Benson was a resident of Ontario who was injured in an ATV accident in British Columbia while driving on a public trail owned by the Northern Rockies Regional Municipality. He was the named insured under an Ontario automobile policy issued by the respondent, Belair Insurance Company Inc., which did not list the ATV as an insured vehicle.

Mr. Perneroski was a resident of Ontario who was injured on a dirt bike which he was riding at a sports resort in Georgia, USA. He was the named insured under an Ontario automobile policy issued by the appellant, Echelon General Insurance Company. The dirt bike was not listed under this policy as an insured vehicle.

Both insureds claimed for Statutory Accident Benefits (SABs) and were denied by their respective insurers on the basis that these accidents occurred outside of Ontario.

The Law

S. 268 of the Insurance Act in Ontario sets out an insured’s entitlement to SABs, subject to any terms, limitations, conditions, provisions, and exclusions listed in the Statutory Accident Benefits Schedule (SABS).

S. 224(1) of the Insurance Act defines “automobile” and includes:

(a) a motor vehicle required under any Act to be insured under a motor vehicle policy.

S. 15(1) of the Off-Road Vehicles Act prohibits driving an off-road vehicle, including an ATV or a dirt bike, unless it is insured under a motor vehicle policy in accordance with the Insurance Act. When all of these provisions are read together, it is apparent that off-road vehicles are considered “automobiles” under the extended definition in the Insurance Act. Therefore, if these accidents had occurred in Ontario, both individuals would have been entitled to receive SABs.

The Lower Court Decisions

The Financial Services Commission of Ontario heard Mr. Benson’s application and upheld his insurer’s decision. The arbitrator began with a “choice of rule of law” analysis and concluded that the laws of British Columbia should apply on the basis that the accident occurred in British Columbia and the ATV was not insured under Mr. Benson’s Ontario policy. British Columbia did not require off-road vehicles to be insured at the time of the accident. Therefore, the ATV driven by Mr. Benson did not constitute an “automobile” under the extended definition in Ontario’s Insurance Act and Mr. Benson accordingly was not entitled to receive SABs. The Director’s Delegate upheld the Arbitrator’s decision and the Divisional Court, on judicial review, concluded that these decisions were reasonable.

Similarly, in Mr. Perneroski’s case, the state of Georgia did not require off-road vehicles to be insured in order to be legally operated. The motion judge in this case also began with a choice of rule of law analysis, but concluded that Ontario law should apply as the insurance contract was formed in Ontario.

Both decisions were appealed to the Ontario Court of Appeal and were heard together.

The ONCA Decision

The court noted that “insured” is defined in SABS Regulation 34/10 and applies to individuals injured in an accident whether the accident occurs within or outside of Ontario:

“insured person” means, in respect of a particular motor vehicle liability policy,

(a) the named insured, any person specified in the policy as a driver of the insured automobile and, if the named insured is an individual, the spouse of the named insured and a dependant of the named insured or of his or her spouse,

(i) if the named insured, specified driver, spouse or dependant is involved in an accident in or outside Ontario that involves the insured automobile or another automobile

S. 243(2) of the Insurance Act, as well as s. 2(3) of the SABS Regulation 34/10 and s. 3(2) of the SABS Regulation 403/96 extend benefits to accidents occurring during the operation of any automobile in Canada, the United States, or any other jurisdiction designated in the SABS. Importantly, Mr. Perneroski and Mr. Benson’s insurance policy contained this same wording and specifically allowed coverage for automobile incidents occurring within Canada and/or the United States.

The court then moved to an analysis of whether a dirt bike and ATV could fit within the definition of “automobile” laid out in the SABS. Both vehicles were governed by the Ontario Off-Road Vehicles Act which held that an off-road vehicle could not be driven without insurance, except where the vehicle is driven on land occupied by the owner of the vehicle or where an off-road vehicle is driven in a sponsored close course competition or rally. Neither Mr. Perneroski nor Mr. Benson were driving off-road vehicles in circumstances that fit within one of these exceptions.

The Ontario Court of Appeal went on to clarify that the approach taken by the lower courts to apply a choice of law analysis was erroneous since it failed to consider the context and purpose of s. 224(1) of the Insurance Act. The court held that the words “any Act” in s. 224(1), when read in conjunction with s. 87 of the Legislation Act, confines the definition to an Act of the Legislature of Ontario. The Court concluded that looking to a statute of another jurisdiction to determine whether insurance is required is an error. The Off-Road Vehicles Act, therefore, has the effect of defining an off-road vehicle as an automobile for the purpose of s. 224(1) and s. 3(1) of the SABS Regulation 34/10.

 The court held:

[42]       On a plain reading of ss. 15(1) and (9) of the Off-Road Vehicles Act, and s. 2(1) 5. of the ORVA Regulation, insurance is required to drive an off-road vehicle except on the owner’s own property or where the off-road vehicle is designated by regulation as an exempt class of vehicles. Those sections therefore have the effect of defining an off-road vehicle as an “automobile” for the purpose of s. 224(1) and s. 3(1) of the SABS Regulation 34/10 (formerly s. 2(1) of the SABS Regulation 403/96), except when it is driven on the owner’s own property or in a sponsored closed course competition or rally. There is no language that limits that definition to off-road vehicles driven in Ontario.

[45] I also respectfully disagree with the statement by the Divisional Court that Mr. Benson could have no legitimate expectation that his insurer would cover an accident involving an ATV because ATVs were not included in his policy. To the contrary, the SABS Regulations make it clear that if you are a defined insured person you are covered for incidents in the insured automobile or another automobile. A person can expect coverage if the accident occurs in an automobile within the extended definition.

[49]       To conclude, I am satisfied that when considering the extended definition of automobile, the circumstances to be considered are those mandated by the relevant statutory provisions that state when a vehicle is required to be insured under a motor vehicle liability policy. As a definitional mechanism, the provisions are applicable to any incident for which SABs may be payable in the same manner, regardless of where the incident occurred within the geographical coverage area of the relevant Ontario insurance policy.

The Court went on to suggest that this interpretation is consistent with the provisions of the Insurance Act, the SABS Regulations, and the policies held by both insureds, which state that SABs will be provided whether the incident occurs anywhere in Canada, the United States and other designated jurisdictions. It is also consistent with the statutory scheme for insurers’ liability for the payment of SABs set out in the Insurance Act which does not differentiate based on the location of an accident. By applying a uniform definition of “automobile insurance” regardless of location, the same insurer will be called upon to pay the benefits. The Court concluded that no unfairness among insurers arises from this result.

Takeaway for Insurers

A defined insured under the SABS Regulations is entitled to coverage for incidents in the insured’s own automobile or another automobile. An insured can therefore expect access to SABs if an accident occurs in an off-road vehicle, which is swept into the definition of “automobile” by virtue of the extended definition provided for in s. 224(1) of Ontario’s Insurance Act. These provisions are applicable to any accident, regardless of whether it occurs outside of the geographical scope of Ontario.

SABs coverages are created by a regulation and therefore insurers cannot simply change the wording of their policies to contain this risk. Therefore, insurers will have to add this risk as factor when pricing their auto policies unless a change to the regulation is made.

Shawn O’Connor and Sarah Mack (articling student)