In Kahlon v. ACE INA Insurance, 2019 ONCA 774, the Ontario Court of Appeal held that a commercial truck driver was not entitled to underinsured coverage from either his personal automobile insurer or a fleet insurer.
Kahlon was involved in a serious accident in Florida. He had been operating a truck. He stepped out of the truck to see what was causing a traffic delay and was struck by another vehicle. The at-fault driver only had $20,000 in liability insurance.
Kahlon was insured under a personal automobile policy in Ontario with Allstate. The company for which Kahlon was operating the truck had fleet insurance in Ontario with ACE INA.
On a motion, Justice Whitten determined that Allstate was obliged to respond for underinsured coverage and that ACE INA was not required to respond. The Court of Appeal held that neither Allstate, nor ACE INA, was responsible for underinsured coverage.
Purpose of Underinsured Coverage
The purpose of underinsured coverage is to protect an insured who may be involved in an accident with a driver who has low liability insurance limits. The insured's own insurer must make up the shortfall in damages, up to the insured's policy limits.
Although underinsured coverage is optional, most personal automobile policies in Ontario have such coverage.
However, expert evidence showed that commercial fleet insurers in Ontario have not offered underinsured coverage in respect of heavy commercial vehicles for around 15 years. They stopped doing so because of the increased risk posed by truck fleets travelling into the United States. Many drivers in the United States have very low liability insurance limits.
OPCF 44R Endorsement
In Ontario, the OPCF 44R endorsement governs underinsured coverage.
Section 22 of the OPCF 44R endorsement states: "Except as otherwise provided in this change form, all limits, terms, conditions, provisions, definitions and exclusions of the policy shall have full force and effect".
Therefore, the conditions in the Ontario Automobile Policy (OAP 1) are applicable to underinsured coverage.
Section 2.2.3 of the OAP 1 provides that, if an insured is driving a vehicle not described on the policy, that vehicle must not have a gross vehicle weight rating of more than 4,500 kilograms.
In other words, the OAP 1 excludes coverage for heavy commercial vehicles.
Court of Appeal's Decision
Since Kahlon was operating a heavy commercial vehicle, the Court of Appeal said that he was not entitled to underinsured coverage from Allstate.
Further, underinsured coverage was not available under ACE INA's fleet policy because that policy contained an endorsement which restricted such coverage.
Specifically, the endorsement provided that underinsured coverage was only available when the driver was operating a private passenger vehicle or light commercial vehicle, not a heavy commercial vehicle.
The endorsement was held to be applicable even though it was not in an approved form.
No underinsured coverage whatsoever was available to the plaintiff. Since the plaintiff sustained serious injuries, there will likely be a shortfall in his recovery of damages, unless the at-fault driver has sufficient assets to personally satisfy a judgment.
The Court of Appeal found this to be an unfortunate, but necessary, result, noting that "this outcome follows from the decision of the provincial government many years ago not to make underinsurance coverage mandatory".
The Court of Appeal concluded: "courts have no authority to simply override contractual language in order to force the provision of coverage where none is contemplated by the existing language of the insurance policy and the endorsement, just because they might consider it good public policy to do so. This is the business of the provincial government, not the courts".
Rogers Partners LLP is an experienced civil litigation firm in Toronto, Ontario. The firm represents insurers and self-insured companies in numerous areas, including motor vehicle negligence, occupiers' liability, product liability, professional negligence, construction claims, statutory accident benefits, disability benefits, municipal liability, medical negligence, sexual abuse, and insurance coverage disputes.
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