The Court of Appeal has just released its decision in Kingsway v. Gore and Security National v. Markel dealing with regular use issues. Both matters dealt with similar facts, namely:
A truck driver (contractor, sole proprietor) owns a truck and enters into an owner/operator agreement with a trucking company to deliver items, etc. for the trucking company. Under the usual agreement, the contractor agrees to operate the truck exclusively for the trucking company's business and not to use if for personal use. The truck then becomes a specified vehicle on the trucking company's policy.
The issue is whether the vehicle that is insured under the trucking company's policy is being made available for the driver's (who was often the contractor/owner of the truck) regular use for the purpose of section 66 of the SABS.
In Axa v. Markel (1996), which was upheld on appeal, the arbitrator held that it was the contractor making the vehicle available for the trucking company's regular use, not the other way around. Accordingly, the arbitrator held that the driver of the truck at the time of the accident was not a "deemed named insured" under the trucking company's insurance policy that insured the truck.
Arbitrators have been following Axa v. Markel ever since, finding that the regular user of the truck is not a deemed named insured under the policy insuring the truck. However, for reasons summarized below, the Superior Court held on September 27, 2010 that Axa v. Markel was wrong and that a regular user in these circumstances can be a deemed named insured under the truck's policy.
In Kingsway v. Gore, the arbitrator distinguished Axa v. Markel and subsequent cases on the basis that they involved an individual making a vehicle available to a trucking company, while in the case before him the owner/operator contract was between a "sole proprietor and the hauling company". Although the judge agreed with the arbitrator's conclusion (that the driver was a deemed named insured under the truck's policy), he disagreed with the distinction, finding that a contract with a sole proprietor is the same as a contract with an individual. He held the arbitrator was correct in arriving at the ultimate conclusion that a sole proprietor making a vehicle available to himself was not disqualified from the scope of s. 66 (1) of the SABS.
In Security National v. Markel, the arbitrator was of the opinion that under s. 66 (1) of the SABS, an insured vehicle cannot be made available for an individual's use by a sole proprietorship when the individual is the sole proprietor. In his opinion, to accept this possibility is to put a strain on the wording of the Regulation that it cannot reasonably bear. Accordingly, the arbitrator held that the driver was not a "deemed named insured" because the vehicle was not being made available for his regular use by a sole proprietorship, corporation, etc. On appeal, the judge disagreed, finding that there is no reason not to give s. 66 (1) its plain meaning that admits of the possibility that an individual who is a sole proprietor may make an insured vehicle available to himself and then be deemed to be a named insured under the policy insuring the vehicle.
The Court of Appeal agreed with the Superior Court and dismissed the appeals. In a relatively lengthy decision, the Court held that the regular use provisions under the SABS permits an insured vehicle to be made available for an individual’s regular use by the individual’s sole proprietorship. This is evident from the language of the provision (section 66 of the Old SABS; section 3 (7)(f) of the New SABS) and its legislative purpose. The Court of Appeal held that the intent of the regular use provisions is that the commercial insurer should be responsible for the accident benefits arising from the operation of the commercial vehicle.
In short, based on the Court of Appeal’s decision, the law in Ontario (overturning Axa v. Markel) is now that pursuant to the regular use provisions under the SABS, a sole proprietor can make a vehicle available for his/her regular use. If the evidence supports this finding, the individual will have coverage under the policy insuring that vehicle.
In other words, an owner/operator of a vehicle that is insured with a third party's insurer can be deemed to be a named insured under the third party's policy if they meet the requirements under the regular use provisions of the SABS, namely, that the vehicle is being made available by a "sole proprietorship, joint venture, etc.". So the distinction between a contractor as an individual (not a business entity) and the contractor as a sole proprietor (business entity) is now moot. It is also clear that the business entity that is making the vehicle available for one's regular use need not be the named insured under the policy insuring the vehicle.
This is a good decision because, as the Court of Appeal found, it makes sense. When a truck driver has an accident while operating his truck in the course of transporting goods, why should he/she have to go back to their own personal vehicle insurance to claim benefits, when their personal vehicle had nothing to do with the accident?
See Security National Insurance Company v. Markel Insurance Company, 2012 ONCA 683.