A claim for benefits under a contract of insurance is not a tort claim, and the law governing the jurisdiction where the loss occurred may not necessarily modify the contract of insurance

An Insurer appealed an arbitrator’s finding that the loss transfer provision in the Ontario Insurance Act applied to the Insurers in relation to a motor vehicle accident which occurred in Vermont. The Court upheld the arbitrator’s decision but disagreed with the arbitrator’s reasoning. On the basis of Unifund Assurance Co. v. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63, the Court found that that the loss transfer provision was applicable because a claim under the loss provision section of the Act was separate and distinct from the underlying tort action.

Royal & Sunalliance Insurance Co. v. Wawanesa Mutual Insurance Co., [2006] O.J. No. 5131, Ontario Superior Court, December 21, 2006

The Insured was involved in a single motor vehicle accident in the state of Vermont. He was employed as a truck driver and driving a tractor trailer that was not owned by him, was licensed and registered in Ontario, and was insured by Royal & Sunalliance Insurance Co. (“Royal”) under a motor vehicle insurance policy issued in Ontario. The Insured also owned a private passenger vehicle which was licensed and registered in Ontario and was insured by Wawanesa Mutual Insurance Co. (“Wawanesa”) under a motor vehicle policy issued in Ontario. The Insured claimed statutory accident benefits under the Statutory Accident Benefits Schedule of the Ontario Insurance Act, R.S.O. 1990, c. I.8 and by virtue of section 268(2) of the Act, his recourse was against Wawanesa as the owner of his own passenger vehicle. Wawanesa paid the statutory accident benefits to the Insured, and then claimed indemnification from Royal under section 275 of the Act. Section 275 provides that an Insurer responsible under subsection 268(2) for the payment of statutory accident benefits is entitled to indemnification from the Insurers of the automobiles involved in the incident which gave rise to the responsibility. Royal argued that it was not obligated to indemnify Wawanesa on the grounds that the law of Vermont applied, and there were no loss transfer provisions in that jurisdiction.

The arbitrator applied the ruling in Tolofson v. Jensen, [1994] 3 S.C.R. 1022 and found that section 275 applied because “to have the insurer be forced to pay accident benefits pursuant to Ontario law and an Ontario contract for an accident in Vermont, and then forbid it from recovering the costs of those benefits which it would be allowed to do under Ontario law (loss transfer), has all the hallmarks of injustice”. The Court agreed with the arbitrator’s finding, but disagreed with the arbitrator’s reasoning. The Court found that Tolofson v. Jensen was inapplicable to the situation, as that case dealt with the law in relation to a tort claim occurring in another jurisdiction. Relying on Unifund Assurance Co. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63, the Court found that the issue between Wawanesa and Royal was not a tort claim; rather, Wawanesa’s claim was a statutory claim under 275 of the Act, and constituted a separate and distinct claim from any underlying tort claim. The statutory claim was governed by the provisions of the Ontario Insurance Act.

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