Canada: Off The Hook: Responding Insurer Is Not Tied To First Insurer's Definition Of "Accident"

Last Updated: November 23 2016
Article by Tim Gillibrand

A new Superior Court decision tries to tackle the complicated interplay between a coverage dispute under the SABS and the priority disputes between insurers scheme in section 268 of the Insurance Act and O. Reg. 283/95.

Unifund v Security National involved a claimant who was injured while operating her boyfriend's ATV on his property. The ATV was a "described automobile" on a policy of insurance issued by Security National. The claimant was a named insured under a Unifund policy, which did not specifically include coverage for ATVs.

The claimant applied for benefits to Security National, to which she was entitled (as an occupant of the vehicle at the time of the accident). Security National commenced a private arbitration against Unifund, arguing that Unifund was higher in priority pursuant to section 268 (2) of the Insurance Act. In the usual course, Unifund would stand higher in priority because the claimant was its "named insured", whereas she was merely an "occupant" of the ATV insured by Security National.

Unifund resisted the priority dispute on the basis that the ATV would not be considered an "automobile" under its policy. Section 2(1) of the SABS (2010) indicates that accident benefits are available under a motor vehicle liability policy in circumstances of an "accident", which is defined in part as "the use or operation of an automobile". Based on the existing legal framework, an ATV is not considered to be an "automobile" when being operated on private property belonging to its owner.

Referring to the "is it an automobile?" test that the Court of Appeal established in Adams v. Pineland Amusements1, Arbitrator Bialkowski found, correctly, that the claimant had been involved in an "accident" as it concerned the Security National policy. He found that the ATV was defined in the Security National policy as an "automobile", satisfying part two of the Adams test.

However, he declined to consider whether the ATV incident would amount to an "accident" under the Unifund policy. His rationale was that the priority scheme in section 268 was an independent process to be engaged once a valid accident benefits claim had been established.

On appeal, Matheson J. found that insurers may resort to the priority regime in section 268 "if more than one policy provides for statutory accident benefits". Therefore, Matheson J. considered it necessary to determine whether each of the relevant policies would have deemed the ATV incident to be an "accident".

Matheson J. agreed with the arbitrator and found that the ATV incident would have been considered an "accident" under the Security National policy. However, she found that it would not meet the definition of "automobile" under the Unifund policy. She held:

The Adams test also underscores the need to consider each policy separately. That case did not consider multiple insurance policies. However, by describing the second part of the test as whether the vehicle is defined as an automobile in the wording of the insurance policy, it properly focused on a single insurance policy. Otherwise, and this is the effect of the Arbitrator's decision, the terms of another insurance policy are permitted to meet the second part of the test and require coverage.

In this case, accident benefits were only available through the Security National policy, which defined the ATV as an "automobile" and not through the Unifund policy, which did not define the ATV to be an automobile. Accordingly, Security National did not have recourse to the section 268 priority regime because the Unifund policy could never provide coverage for this loss. Unifund's appeal was granted, effectively overturning arbitrator Bialkowski's decision.

This case raises questions as to the appropriate handling procedures if the circumstances were reversed. For instance, if Unifund was the first insurer to receive the OCF-1, would it have been obligated to handle the accident benefits claim and pursue priority, even though the particular loss was not covered under its policy? Or could it have denied the claim on the basis that the claimant was not involved in an "accident"?

Matheson J.'s policy-specific approach would seem to support Unifund denying the accident benefits claim if it was the first insurer to receive the OCF-1. However, this would also seem to contradict the Supreme Court of Canada decision in Zurich Insurance Co. v. Chubb Insurance Co. of Canada2, which found it inappropriate for Chubb to deflect an accident benefits application where the claimant had a subjective reason to believe that benefits were available through Chubb. In that case, Chubb had merely offered a non-automobile policy to the claimant. Chubb's argument was, in part, that the policy did not provide accident benefits coverage. Would it be any different for an insurer to argue that its policy does not cover ATVs, when in other circumstances it does insure ATVs? Is the logic endorsed by Matheson J. therefore inconsistent with the overriding intention of the SABS to provide speedy benefits to a claimant who is elsewhere entitled to accident benefits?

A significant distinguishing factor between the Unifund and Chubb cases is that in Chubb, there was no issue that the claimant was entitled to accident benefits, having been involved in a car "accident". There was no question that her loss was covered under the SABS as an "automobile" "accident" under any auto policy that might have insured the claimant. However, in Unifund, the claimant's entitlement to accident benefits under a specific policy turned on whether the vehicle in question was an "automobile" that triggered entitlement to any accident benefits under that specific policy. Therefore, an insurer in Unifund's position might have a reasonable argument that although there might be a nexus between the claimant and the insurer for a particular loss, the obligation to actually pay benefits and pursue a priority dispute cannot be triggered unless the claimant sustains a type of loss that is covered under the policy

The Unifund v. Security National case supports that a priority dispute is only proper if the claimant would have access to accident benefits under each policy involved in the dispute. For now, this reminds us to be vigilant when responding to a priority demand. However, that proposition might ultimately be incorrect as Zurich v. Chubb does not support that coverage under multiple policies is necessary to engage the Section 268 priority regime. Nor is it explicitly required by Section 268. The proper question for an insurer receiving an OCF-1 might be, among other things, whether the claimant's loss would be covered under the SABS for the particular loss with respect to that policy. The insurer should not determine whether the claimant is an "insured person" under the policy (for example, whether the claimant is a dependant or a spouse), as that is a question reserved for the priority dispute scheme. But the insurer could consider whether the claimant was involved in an "accident" that would otherwise be covered under the SABS.

N.B. – Matheson J. held that the appropriate standard for review on appeal of a question involving mixed fact and law was "reasonableness". This is consistent with the recent Court of Appeal decision in Intact Insurance Company v. Allstate Insurance Company of Canada3. A "reasonableness" standard entails a higher level of deference to the hearing arbitrator than the standard of "correctness". This may cause concern amongst insurers as the appeal process could have less teeth moving forward. However, Matheson J.'s decision is a step in the right direction as she did not shy away from delving into the substantial legal issues to find that arbitrator's decision was unreasonable.

See Unifund Assurance Company v Security National Insurance Company, 2016 ONSC 6798 (CanLII)


[1] 2007 ONCA 844 (CanLII)

[2] [2015] 2 SCR 134, 2015 SCC 19 (CanLII)

[3]2016 ONCA 609 (CanLII).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Tim Gillibrand
Similar Articles
Relevancy Powered by MondaqAI
Samis + Company
Miller Thomson LLP
Miller Thomson LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Samis + Company
Miller Thomson LLP
Miller Thomson LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions