Where a person is not a named insured on an automobile policy and that person operates a vehicle listed on that policy, the policy holder for the vehicle is not absolutely liable under section 258 of the Insurance Act, R.S.O. 1990, c. I.8, if that person is involved in a motor vehicle accident. Section 258 will not be engaged unless it is established that the operator of the vehicle was an insured under the policy. To be an insured under the policy, the operator of the vehicle must have been either a named insured or a person driving with the named insured’s consent at the time of the accident, and the vehicle being driven must have been owned by a named insured.

[2014] O.J. No. 4638

2014 ONSC 5487

Ontario Superior Court of Justice

S.E. Firestone J.

October 2, 2014

The main action arose following a motor vehicle collision. The defendant was driving a car that he had purchased from his father one year previous, but the vehicle remained insured in his father’s name. The father and his wife were listed as insureds under the automobile insurance policy, but the son was not. The father’s insurer, Wawanesa Mutual Insurance Company (“Wawanesa”), denied coverage to the son because he was not a named insured under the policy.

The plaintiffs named Belair Direct Insurance Company (“Belair”) in the action, as Belair provides uninsured and underinsured coverage for one of the plaintiffs; however, Belair took the position that the defendant was an insured under his father’s policy and on that basis issued a third party claim against Wawanesa.

Wawanesa brought a motion to have the third party claim against it dismissed summarily, arguing that insurance follows the person, not the vehicle. Wawanesa submitted that the policy was not engaged because neither of the two named insureds were the owners or drivers of the car at the time of the accident.

Belair argued that the Ontario Automobile Policy, Owner’s Policy demonstrates by its language that it covers automobiles, not people. Belair argued that Wawanesa was prevented by section 258(5) of the Insurance Act, R.S.O. 1990, c. I.8 from arguing misrepresentation as to ownership in order to avoid paying because the car involved in the accident was a described vehicle listed on the father’s insurance policy. In the alternative, Belair argued that the son was an insured under the father’s policy at the time of the accident, and as a result was entitled to coverage under that policy. Belair argued that the son qualified as an insured because the father was the owner of the car at common law at the time of the accident and the son was driving with the implied consent of his father.

The Court rejected Belair’s submission that an insurer is absolutely liable under section 258(5) when an automobile listed in its policy is involved in a collision. Rather, the Court held that section 258(5) is not engaged unless it is established that the operator of the vehicle was in fact an insured.

The Court observed that for there to be coverage under the Wawanesa policy pursuant to section 239(1) of the Insurance Act, Belair must establish (a) a named insured; (b) a vehicle owned by a named insured; and (c) a person driving with the named insured’s consent. The Court held that whether the son was an insured under Wawanesa’s policy at the time of the collision depends on whether the son had the requisite consent (either express or implied) of the named insured to operate the vehicle on the day in question.

There were significant discrepancies between the oral evidence provided by the father’s wife at the hearing, and the son’s examination for discovery evidence. Ultimately, the Court held that the father’s evidence was necessary to determine the questions of ownership of the vehicle and consent for the son to drive the vehicle. Judge S.E. Firestone remained seized of the matter and indicated that he would decide the issue by way of summary judgment once the father’s evidence was heard.