A car dealership may have an obligation to ensure that a person who purchases a vehicle obtains insurance
An Insured failed to notify his Insurer that he had acquired a new vehicle. The Insured was involved in an accident and the Insurer denied coverage. The Insured brought an action against the Insurer and the dealership where he purchased the vehicle. The Insurer, in turn, sought a motion for summary judgment dismissing the action against it on the ground that there was no valid insurance between the Insurer and Plaintiff at the time of the accident. This motion was allowed but the action against dealership was allowed to continue.
Kovacs v. Brian Cullen Motors Ltd.,  O.J. No. 1123, Ontario Superior Court of Justice, March 18, 2009, T.R. Lederer J.
The insurer, Liberty Insurance Company of Canada, insured Plaintiff’s vehicle prior to 2002. The Plaintiff purchased a new vehicle in July 2002 from the Defendant dealership, Brian Cullen Motors Ltd. It was Plaintiff’s belief that the dealership transferred his insurance coverage to the new vehicle. In September 2002, Plaintiff was involved in a motor vehicle accident. Since the Plaintiff had not informed the Insurer of the acquisition of the new vehicle, the policy had lapsed. The Court allowed the insurer’s motion and ruled that there was no genuine issue for trial. The Counsel for the Plaintiff expressed a concern that as a result of section 2(1) of the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C. 25, a determination that his client was without insurance would also end the tort claim that he had commenced against the driver and owner of the other vehicle involved in the accident. Contravention of this section is a strict liability offence. Once the absence of insurance is proven on a prima facie basis, the onus shifts to the accused to show either an honest but mistaken belief of the fact that there was valid insurance, or the exercise of due diligence. On this basis, the Court was not prepared to dismiss the claim against the dealership that sold the Insured his new vehicle but dismissed the claim against the Insurer.
This case was originally summarized by Cameron B. Elder and originally edited by David W. Pilley.
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