The Ontario Court of Appeal has recently released a decision
that will be widely applauded by the insurers of heavy commercial
The Court of Appeal has clarified that only insurers of vehicles
directly struck by heavy commercial vehicles will be entitled to
indemnification through loss transfer while insurers of vehicles
involved in a 'chain reaction accident' but not directly
struck by the heavy commercial vehicle will have no recourse.
In November 2007, a Pepsi truck rear-ended a Dodge stopped near
an intersection in Mississauga. The impact of this collision caused
the Dodge to rear-end a Nissan, which was also stopped near the
intersection. All of the automobiles were travelling in the same
direction and in the same lane. The Pepsi truck was insured by Old
Republic and the Nissan was insured by State Farm. The driver of
the Nissan collected Accident Benefits from State Farm and, in
turn, State Farm claimed indemnification by way of the loss
transfer provisions of the Insurance Act from Old Republic. The
main issue in this case was whether Old Republic must indemnify
The Arbitrator and the Superior Court of Justice both reviewed
the Fault Determination Rules and concluded that the Pepsi truck
was 100% responsible for the incident — meaning the chain
reaction — and that Old Republic must indemnify State Farm
for the AB benefits paid out following the accident. Old Republic
appealed this decision to the Ontario Court of Appeal.
The Court of Appeal concluded that the word "incident"
as it appears in sub-clauses (a) and (b) of s. 9(4) can refer only
to the collision identified in the particular sub-clause and not
the entire chain reaction. The Pepsi truck was 100% at fault only
for the collision between it and the Dodge and not for the
collision between the Dodge and the Nissan. As a result, the appeal
was allowed and Old Republic was not required to indemnify State
Farm for the AB payments made.
This decision brings clarity to an area where there was
conflicting case law and ought to simplify ongoing and future
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