An insurer must provide notice to all of the policy holders in order to cancel a policy

Where one policy number is issued with respect to a number of family automobiles, the overall policy holder is entitled to notice of cancellation of one of the policies.

Co-Operators General Insurance Co. v. Carter, [2008] A.J. No. 457, April 22, 2008, Alberta Court of Queen’s Bench, D.L. Shelley, J.

The applicant insurance company sought a declaration that an automobile insurance policy sold to the respondent had been effectively cancelled prior to an accident involving the defendant. The policy had been sold to the respondent’s father as part of the applicant’s marketing strategy to insure all of a family’s vehicles under one policy. The premiums for all the family vehicles, including the respondent’s, were automatically deducted from the father’s bank account.

The respondent failed to deliver a copy of a mechanical inspection report to the applicant, as was required by the policy. As a result, the applicant issued a letter to the respondent that his policy would be cancelled within thirty days. The applicant did not notify the respondent’s father of the cancellation, and in fact provided a renewal notice to the father, for all three family policies, without mention of the imminent cancellation of the respondent’s policy.

The applicant took the position that the termination was effective, because the respondent’s father had no insurable interest in the respondent’s vehicle, and was therefore not entitled to termination of coverage on it. The respondent took the view that “where one policy number is issued with respect to a number of family vehicles, it is reasonable for the average person applying for insurance to understand that” the overall policy holder is entitled to notice of cancellation. The court agreed with the respondent’s position, holding at para. 40 that:

 [the respondent’s father] would have had an expectation that matters related to coverage under his Policy (including that related to the [respondent]) would be brought to his attention, consistent with his past dealings with his insurance company.

This case was digested by W. Jay Havelaar and edited by David W. Pilley of Harper Grey LLP.

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