Owner and the Named Insured

Case Facts

This case was between the Minister of Finance, Ontario and Traders General Insurance.
In this circumstance, there had been an accident of a vehicle which was owned by Peter Leonard. Traders General Insurance was the auto insurer of the vehicle and sent a policy termination notice to Anne Leopard, the ‘named insured’ under the auto insurance policy. But, the vehicle was not owned by the named insured under the policy.
Peter Leonard owned the Hyundai motor vehicle in which a passenger was seriously injured. Peter’s spouse, Anne Leonard had the auto insurance policy with Traders. At the time of the accident, the policy status was not valid as it has been terminated due to non-payment of premiums. Also, the vehicle had been added to the policy, two years earlier.
Traders sent the notice of policy termination by registered mail to Anne and not to Peter. It appeared that Traders had no knowledge that Peter was the owner of the Hyundai as per the policy.
The injured party claimed accident benefits from the Fund which initiated a dispute with Traders. The Fund mentioned that the policy was in force at the time of the accident and was wrongfully cancelled.

Court’s Decision

The Fund was validated by the Superior Court, which ruled that the policy could not be considered as terminated, since no termination notice was received by the vehicle owner.
The Court also maintained that it was the duty of Traders to correctly identify the named insured at the time of policy inception and after that to maintain compliance with statutory requirements. It also mentioned that fifteen days notice was required to be given to Peter and in its absence, the policy was deemed to be active and not cancelled.
Traders General Insurance was ordered by the Court to pay the valid accidents benefits settlement to the injured person.
The Court of Appeal dismissed an appeal filed and sided with the Superior Court. It stated that as per Statutory Condition 11 (1), – notice should have been given to the ‘insured’ and Peter was the ‘insured’ person as the vehicle owner.
It was further validated by section 1 of the Insurance Act, that the auto insurance was an owner’s policy and was tied to the ownership of the vehicle.

Summary

It is summarized that Anne Leonard was not the ‘named insured’ for the Hyundai vehicle. She cannot be considered as the ‘insured’ as she was not the owner. Hence, when the notice of policy termination was sent to her, the policy did not terminate.
Insurers need to do due diligence at the time of underwriting to make sure that owners’ policies should be written only for vehicle owners’ and not anyone else. The strict compliance standards apply to all standard auto insurers.
The questions raised in this case are quite similar to the facts of the case in Echelon General Insurance Company v. Her Majesty the Queen. In this circumstance, the Superior Court decided that policy remains in force till it is terminated properly. An improperly terminated policy remains in effect, which can incur heavy losses for an insurer if the premiums are unpaid for many years.
Auto policy insurers are tasked with identifying the ‘insured’ of their policy, every time they underwrite a policy.

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