Use of an endorsement form not approved under s. 227(1) of the Insurance Act does not necessarily invalidate an agreement between the parties about exclusion from insurance coverage.

Royal & Sun Alliance Insurance Co. of Canada v. Intact Insurance Co., [2017] O.J. No. 2380, 2017 ONCA 381, Ontario Court of Appeal, May 10, 2017, R.G. Juriansz, D.M. Brown and B. Miller JJ.A.

The Ontario Court of Appeal considered whether an endorsement of an automobile insurance policy that excludes coverage for a named driver is valid even though its form is not that pre‑approved by the Superintendent of Financial Services as required by s. 227(1) of the Insurance Act. The Court of Appeal held that the use of an unapproved form does not necessarily invalidate an agreement between the parties about exclusion from insurance coverage.

The insured had met with her insurance broker because her driver’s licence had been suspended for unpaid fines and the insurance on her vehicle was being cancelled. She wanted to maintain coverage on the vehicle so her husband could drive it. Insurance was arranged with the respondent Intact on the basis that the insured would be an excluded driver. The insured executed an Excluded Driver Endorsement.

The trial judge found that when the insured completed the form, the broker explained to her that even if her licence were to be reinstated, Intact would still not insure her and the Excluded Driver Endorsement would continue to apply. The insured’s licence was re-instated, she drove the vehicle, and had an accident in which the MacLeods were injured. The MacLeods commenced a personal injury action against the insured.

The MacLeods’ uninsured motor vehicle carrier, Royal & Sun Alliance, brought an application for a declaration the insured was fully insured by Intact. Intact, relying on the Endorsement, took the position there was no coverage and the insured was uninsured.

The application judge found the Excluded Driver Endorsement was in full force and effect at the time of the accident and that Intact had no duty to defend or indemnify the insured in respect of the accident. Royal appealed.