The Applicant Insured (“Musca”) was successful in obtaining a declaration from the court that his “former” motor vehicle insurer (“AXA”) was obliged to defend a claim arising from a motor vehicle accident which occurred on the day Musca changed insurance carriers and prior to AXA’s receipt of the cancellation certificate

30. March 2004 0

Musca v. Wawanesa Mutual Insurance Co., [2004] A.J. No. 386 Alberta Court of Queen’s Bench

At approximately 11:30 a.m. on August 26, 2002, Musca attended at the offices of an insurance broker who had binding authority from Wawanesa Insurance. At that time, Musca obtained a temporary pink card showing both Musca and his wife as named insureds and evidencing SPF no. 1 coverage for their 1996 Dodge Caravan vehicle. Coincidental with the issuance of the Wawanesa temporary pink card, a document entitled “Cancellation Certificate” was filled out by Musca and his wife. This cancellation certificate was sent by the broker to Musca’s former insurance broker who had provided Musca’s previous policy which was underwritten by AXA Insurance. The cancellation certificate was received by the insurance broker who had provided the AXA policy on August 27, 2002 and was immediately forwarded to AXA. At approximately 2:00 p.m. on August 26, 2002, the 1996 Dodge Caravan operated by Musca’s wife was involved in a motor vehicle accident resulting in a number of claims against Musca.

The court reviewed the policies issued by AXA and Wawanesa and noted that they were in a form commonly known as SPF No. 1, being the standard automobile policy prescribed by regulation in the province of Alberta. Both policies were to provide the Muscas with indemnity with regard to third party liability up to and including the limit of $1,000,000. The court further noted that Musca had been refunded the balance of premiums paid for the AXA policy and that AXA had calculated the premium refund to include the entire day of August 26, 2002. Wawanesa acknowledged that at all times material to this action its SPF No. 1 policy was in force. Damages flowing from the accident exceeded $1,000,000.

Musca argued that the AXA policy was not cancelled and terminated at the time of the motor vehicle accident. AXA responded by arguing that its policy was terminated at the moment that Musca had “requested” the termination. The court agreed that the policy was cancelled upon “request” but held that the request was only made at the time it came to the attention of AXA. AXA did not receive the “request” until after the MVA. The court further noted that public policy was better served by the short-term overlapping of insurance coverage during a transition period than a potential gap in coverage. In the result, the court held that both AXA and Wawanesa were obliged to share equally in defence costs and indemnity relating to the MVA third party claims up to the maximum amount of coverage from each insurer.

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