Kozel v Personal Insurance Co, 2014 ONCA 130

This decision may force automobile insurance companies to insure clients who cause an accident while driving with a lapsed driver's licence.

While vacationing in Florida, 77 year old Barbara Kozel of Ontario was involved in an accident with motorcyclist Arthur Grimes.  Mr. Grimes was seriously injured.

Mr. Grimes commenced a civil action against Ms. Kozel.  Her insurer, The Personal Insurance Company, denied Ms. Kozel coverage because she did not have a valid driver's license at the time of the accident.  Ms. Kozel sought a declaration from the Court that Personal Insurance Co. must indemnify her and defend her against Mr. Grimes' lawsuit.

The Ontario Superior Court ruled that Personal Insurance Co. must indemnify and defend Ms. Kozel.  Although she was driving with an expired license, Ms. Kozel demonstrated due diligence.  She was unaware that her licence had recently expired, and she had a long history of renewing her license on time.

The Personal Insurance Co. appealed.  The Ontario Court of Appeal reversed the application judge's finding of due diligence.  The Court stated that there was no evidence that Ms. Kozel did anything to inquire about or even consider renewing her driver's license.  However, the Court granted Ms. Kozel relief against forfeiting her insurance coverage because:

  1. Ms. Kozel always paid her premiums in a timely manner and acted in good faith;
  2. The breach had no impact on the respondent's ability to drive safely; and
  3. Ms. Kozel stood to lose $1,000,000 in insurance coverage, while her failure to renew her licence in and of itself had caused no prejudice to the insurance company.     

The Personal Insurance Co. was ordered to defend and, if needed, indemnify Ms. Kozel.

Read the whole of Kozel v Personal Insurance Co, 2014 ONCA 130 here

< http://www.canlii.org/en/on/onca/doc/2014/2014onca130/2014onca130.html >

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