In Intact Insurance Company v Aviva Insurance Company of Canada, the Ontario Superior Court upheld an arbitral decision which found that Aviva was entitled to pursue Intact for priority, notwithstanding the fact that its Notice of Priority Dispute was served nearly three years after the 90-day deadline had passed.
Background
On January 11, 2017, the claimant was involved in a motor vehicle accident while working as an Uber driver on his way to pick up a passenger. He was operating his personal vehicle, a 2013 Nissan Rogue, insured by Aviva. At the time, Uber was insured by Intact.
Aviva was first advised of the claimant's intention to apply for accident benefits during a call on January 19, 2017. At that time, he disclosed that he held two jobs, one of which involved delivering pizza for Pizza Pizza. As a result, the claim was flagged due to the potential use of the vehicle for business purposes.
On February 10, 2017, Aviva received two Applications for Accident Benefits (OCF-1), indicating the claimant was employed as a full-time glass installer, with no reference to Uber or Pizza Pizza.
Due to inconsistencies in his statements, Aviva scheduled an Examination Under Oath, which took place on March 16, 2017. During the EUO, the claimant further distanced himself from his earlier statements, stating that he was "not feeling well" during the initial call and insisted he had only ever worked in the glass industry. Following the EUO, Aviva found there was insufficient evidence to establish misrepresentation and proceeded to adjust the claim.
The 90-day limit for disputing priority expired on May 11, 2017. Shortly thereafter, Aviva received the claimant's medical records, including the Ambulance Call Report, which noted that he was working as an Uber driver at the time of the accident.
On June 26, 2018, Aviva attempted to arrange a second EUO. The claimant initially refused to attend, causing a significant delay. The EUO was eventually conducted on August 20, 2019, during which the claimant admitted to briefly driving for Uber and signed an authorization permitting Aviva to obtain his Uber records.
Aviva obtained the Uber records on December 9, 2019, and subsequently served a Notice of Dispute on Intact on January 14, 2020—nearly three years past the 90-day deadline.
At arbitration, the arbitrator concluded that Aviva was not in breach of the 90-day notice requirements and, accordingly, entitled to pursue its priority dispute against Intact.
The Decision
On appeal at the Superior Court of Justice, the arbitrator's decision was upheld.
In reaching its conclusion, the Court considered Liberty Mutual Insurance Company v Zurich Insurance Company, which addressed the application of s. 3(2) to extend the 90-day notice period, where the claimant had misrepresented his address. Despite finding that the first insurer's investigation was reasonable, the Court held that 90 days was sufficient, as the insurer had a police report indicating the claimant lived at a different address—a "basic investigative tool"— which it failed to follow up on.
In this case, the Court found Liberty distinguishable, as there was no information indicating the claimant was driving for Uber. While the claimant's earlier comment about delivering pizzas may have raised red flags, there was no evidence in Aviva's possession that the claimant was operating as an Uber driver until after the 90-day period had expired. As such, Aviva's delayed Notice to Intact was held to be reasonable. The Court further noted that this conclusion was consistent with the principle that a Notice of Dispute should only be issued by an insurer where there is a sound basis for doing so.1
Intact also challenged the reasonableness of Aviva's investigation, arguing that Aviva had failed to specifically address priority during the first EUO. The Court rejected this argument, emphasizing that the proper question was not whether additional steps could have been taken, but whether the steps that were taken were diligent and reasonable.
The Court endorsed the Arbitrator's approach in assessing Aviva's investigation in the context of the priority scheme set out in s. 268 of the Insurance Act.The claimant was the "named insured" under the Aviva policy, which insured the vehicle he was operating at the time of loss. Accordingly, Aviva's only investigative avenue was to determine whether the vehicle was being used for commercial purposes and whether it may have been insured by another insurer while being operated for such a commercial entity. Given the circumstances, the Arbitrator found that the scope of investigation required was "extremely limited," and that Aviva had reasonably fulfilled this limited investigative duty, particularly in light of the claimant's misrepresentations.
Key Takeaways
This case reaffirms that while insurers are required to act diligently when investigating potential priority disputes, their investigative efforts need only be reasonable—not exhaustive. The Court made clear that an investigation will not be considered deficient simply because additional steps, viewed with the benefit of hindsight, might have been useful. In Aviva's case, the investigation was necessarily limited, as the claimant was the named insured under its policy, and there was no information within the 90-day period suggesting he was driving for Uber.
The decision also reinforces the principle that insurers should not issue a Notice of Priority Dispute speculatively or prematurely, without a factual foundation to support such a notice. In this case, the Court affirmed that Aviva acted appropriately by refraining from issuing a notice until it had clear evidence confirming that another insurer could be liable.
Case Citations:
Arbitration Decision – Aviva Insurance Co of Canada v Intact Insurance, [2022] OLAA No 386.
Intact-v-Aviva-ONSC-Decision-.pdf
Footnote
1. Guarantee v Kingsway General, December 20, 2013 (Arbitrator Novick)
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