Optional uninsured motorist coverage is distinct from the uninsured motorist protection provided for under the Ontario Insurance Act. The latter is a creature of statute, which excludes coverage for uninsured vehicles owned by an insured or their spouse. The former is subject to the principles of policy interpretation and may provide coverage for an uninsured vehicle owned by an insured or their spouse, even if the language is identical to the Insurance Act.

Insurance law – Automobile insurance – Consent to drive – Uninsured motorist – Underinsured motorist – Statutory provisions – interpretation

Skunk v. Ketash, [2016] O.J. No. 2050, 2016 ONSC 2019, Ontario Superior Court of Justice, March 22, 2016, W.D. Newton J.

This action arose out of a single vehicle accident (the “Accident”) involving a vehicle owned by the plaintiff’s wife (the “Vehicle”). On the day of the Accident, the plaintiff borrowed the Vehicle. He picked up the defendant, Ketash , and they stopped at a store. While the plaintiff was inside, Ketash took the driver’s seat. When he returned, the plaintiff got into the passenger’s seat and Ketash drove away. She subsequently lost control of the vehicle, causing the Accident. The plaintiff was severely injured. Ketash was charged with theft of the Vehicle, although it was in dispute whether she had been given consent to drive it. In any event, Ketash did not have automobile insurance at the time of the accident.

The Vehicle was insured by the defendant insurer (the “Insurer”). Under that policy (the “Policy”), the vehicle was rendered uninsured in the event it was driven without the owner’s consent. Accordingly, the plaintiff sought uninsured motorist coverage from the Insurer. He also sought coverage under the Policy’s optional Family Protection endorsement, which provided coverage for inadequately insured motorists (the “Endorsement”). The Insurer denied coverage and brought an application for summary judgment. The Insurer took the position that, pursuant to the Insurance Act, RSO 1990 c. I.8, a plaintiff cannot succeed in an uninsured vehicle claim where the uninsured vehicle is owned by that plaintiff’s spouse. The Insurance Act states:

“Uninsured automobile,” means an automobile with respect to which neither the owner nor driver has applicable and collectable bodily injury liability and property damage liability insurance for its ownership, use or operation, but it does not include an automobile owned by or registered in the name of the insured or his or her spouse.

The Insurer further argued that this principle stands even where the vehicle becomes uninsured through theft by a third party. For this proposition, the Insurer relied on the Ontario Supreme Court’s decision in Fosker v. Thorpe, 2004 CanLII 33358 (ONSC) (“Fosker”).

In Fosker, Mr. Justice Quinn considered a claim for bodily injuries arising from the theft of an insured’s vehicle. The insured was struck by the vehicle while the thief was trying to escape. Mr. Justice Quinn reviewed the above definition of “uninsured automobile”, and concluded that the impugned vehicle did not qualify. In doing so, he noted that despite the unfortunate result, the language of the statute was clear and unambiguous. He found that the insured was barred from receiving uninsured motorist coverage.

The Judge in Skunk expressed concerns with the Fosker decision. In his view, the language of the statute was not ‘clear and unambiguous’, but was instead ‘worded poorly.’ However, he noted that he was obliged to follow Fosker based on the principles of judicial comity. He concluded that there could not be coverage under the general underinsured motorist provisions.

The Judge then went on to make an interesting finding. He noted that the underinsured motorist provisions arose from the Insurance Act, and were accordingly subject to the rules of statutory interpretation. He distinguished the plaintiff’s claim under the Endorsement, finding that the Endorsement was not a “creature of statute” but rather a term of a contract. Accordingly, he found that the usual rules of policy interpretation were applicable. He then considered the language of the Endorsement, which read, in part:

1.5 “inadequately insured motorist” means

(a) the identified owner or identified driver of an automobile for which the total motor vehicle liability insurance or bonds, cash deposits or other financial guarantees as required by law in lieu of insurance, obtained by the owner or driver is less than the limit of family protection coverage; or

(b) the driver or owner of an uninsured automobile or unidentified automobile as defined in Section 5, “Uninsured Automobile Coverage” of the Policy.

…

1.11 “uninsured automobile” means an automobile with respect to which neither the owner nor driver thereof has applicable and collectible bodily injury liability and property damage liability insurance for its ownership, use or operation, but does not include an automobile owned by or registered in the name of the insured or his or her spouse.

Despite the fact that the definition of “uninsured automobile” was essentially identical to the definition under the Insurance Act, the Judge found that the Endorsement’s language was ambiguous. He construed the policy language against the Insurer. He held that, in the event that Ms. Ketash had taken the Vehicle without consent, the Vehicle would qualify as an uninsured automobile under the Endorsement and that coverage would accordingly be available. He dismissed the Insurer’s application for summary judgment.

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