A lessor was not entitled to third party liability coverage under a policy placed by the lessee as the policy did not name the lessor as an insured.
Coast Capital Equipment Finance Ltd. v. Old Republic Insurance Co. of Canada,  O.J. No. 5768, 2017 ONSC 6694, Ontario Superior Court of Justice, November 7, 2017, P.J. Monahan J.
A leased vehicle was involved in a motor vehicle accident and the lessor sought third party liability coverage from the insurer under a policy placed with the insurer by the lessee.
Pursuant to the terms of the lease, the lessee was required to obtain insurance with third party liability coverage which named the lessor as an insured and advise the lessor 30 days prior to any alteration or cancellation of insurance. The insurance broker provided the lessor a certificate of insurance indicating that the policy included the lessor as an additional insured and loss payee. However, the lessor had not in fact been made a named insured on the policy and was only a lienholder/lessor. Further, the lessee had entered into a commercial premium finance agreement and assigned its right to cancel the policy to the financer. The lessee defaulted on its payment resulting in the financer cancelling the insurance policy prior to the accident.
The Court held that there was no coverage for the lessor and the insurance broker had no authority to bind the insurer. Further, the requirement in the lease agreement for the lessee to obtain insurance coverage for the lessor did not bind the insurer who was not party to that agreement.