Subrogated automobile claims may be brought in Ontario for property damage
The cargo insurer of a trailer damaged in a motor-vehicle accident was entitled to bring a subrogated action in the name of the insured against the defendant driver notwithstanding the direct compensation scheme set out in s. 263 of the Insurance Act, R.S.O. c. I.8.
G.L. Gibbons Delivery Service Ltd. v. Jenkins,  O.J. No. 1790, Ontario Superior Court of Justice, T.P. Herman, J., May 6, 2008
The insured was hired to deliver a trailer. While an employee of the insured was en route, towing the trailer, he was rear ended causing extensive damage to the trailer, which was ultimately written off. The insurer paid out under the insured’s cargo insurance policy. The insurer then sought to recover that sum from the defendant by bringing a subrogated claim in the name of its insured. The insurer of the defendant refused to pay the claim because in its view the trailer was not cargo and its loss was covered by the direct compensation scheme in s. 263 of the Insurance Act, R.S.O. c. I.8.
Section 263 of the Insurance Act provides that in certain circumstances the insured’s right of recovery for damages to his or her automobile and contents is against the insured’s insurer, not against the insurer of the other motor vehicle.
In this case. the trailer was covered by a cargo insurance policy. The insured’s motor vehicle liability policy provided that a trailer that was not owned by the owner of the towing vehicle was covered under the towing vehicle’s motor vehicle liability policy, but was not covered for direct compensation.
The plaintiff argued in the alternative that the claim was not barred because the exception in s. 263(7) of the Insurance Act applied. That section provides as follows:
“This section does not apply to damages to those contents of an automobile that are being carried for reward.”
It was not in dispute that the trailer was not being towed for reward but the defendant submitted that the trailer was not contents nor was it being carried. The court concluded that the trailer was being “carried” by the towing vehicle because it was being transported. The court also concluded that the purpose of s. 263(7) is to exclude objects that are being carried for reward from direct compensation and as such the trailer fit within the definition of “contents” for the purpose of that section.
This case was originally summarized by Cameron D. Elder and originally edited by David W. Pilley.
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