Stolen ATV covered for SABS benefits under umbrella policy of priority insurer

An insurer who acquired ownership of a stolen ATV was obliged to provide statutory accident benefits under the Ontario Statutory Accident Benefits Schedule to an infant injured while riding the ATV two days after the insurer had acquired ownership.

Insurance law – Automobile insurance – Statutory Accident Benefits – Commercial general liability insurance – Umbrella policies – Excess liability coverage – Arbitration

Farmers’ Mutual Insurance Co. (Lindsay) v. Ontario (Minister of Finance), [2017] O.J. No. 1072, 2017 ONSC 1192, Ontario Superior Court of Justice, March 2, 2017, D.G. Stinson J.

Farmers’ Mutual Insurance Co. (“Farmers”) insured an all-terrain vehicle (“ATV”) that was stolen from their insured. The insured reported the ATV stolen. Approximately two months later Farmers registered its ownership of the ATV after indemnifying the insured. Two days after Farmers registered its ownership, an 11-year-old suffered a serious head injury while riding the ATV. At the time, the infant was living with his mother and grandparents. The grandfather had motor vehicle insurance with Dominion of Canada General Insurance Company (“Dominion”). A claim for no fault benefits under the Statutory Accident Benefits Schedule (“SABS”) was filed on behalf of the infant with Dominion. Dominion began to adjust and pay the SABS claim, but commenced a priority dispute with the Minister of Finance, asserting that the Motor Vehicle Accident Claims Fund (the “Fund”) should be responsible for paying the claim. In turn, the Fund served a priority notice on Farmers. The Fund and Farmers proceeded to arbitration.

The arbitrator concluded that the ATV was covered for SABS benefits under an umbrella policy issued by Farmers and therefore concluded that Farmers was the priority insurer responsible for paying SABS benefits to the infant. Farmers appealed the decision of the arbitrator and the Fund brought a cross appeal.

Three Farmers policies in which Farmers was both the insurer and the insured were considered by the arbitrator. The policies included a motor vehicle policy in the standard Ontario Automobile Policy form OAP 1 (the “OAP policy”), a CGL policy and a commercial umbrella liability policy (the “Umbrella policy”). The Umbrella policy provided excess liability coverage above the limits of the OAP policy and the CGL policy. At the time of the incident, Farmers had not added the ATV under the OAP policy as it was not its practice to do so in these circumstances. As a result, the ATV was not expressly listed as an insured under any of the Farmers policies.

The arbitrator determined that since the ATV was not expressly insured under the OAP policy, the question of coverage under the OAP policy and hence SABS benefits coverage turned on whether the ATV came within the scope of the “Newly Acquired Automobiles” coverage provided under s. 2.2.1 of the OAP policy. A pre-condition under s. 2.2.1 was that Farmers insure all automobiles owned by Farmers. At the arbitration hearing, Farmers presented evidence from a past arbitration where ownership of a stolen truck had passed to Farmers. Farmers did not insure the truck under the OPA policy. The truck was later found and the past arbitrator concluded that it was an automobile owned by Farmers, but not insured by Farmers. Based on these facts, the arbitrator in the present case found that Farmers did not insure all of the automobiles it owned with Farmers (as the insurer) and therefore concluded that the Newly Acquired Automobiles provision did not operate to extend coverage to the ATV, and thus the OAP policy did not provide SABS coverage. Importantly, the Fund’s argument that the vehicles were insured under the Umbrella policy was not addressed by either arbitrator.

The arbitrator concluded that coverage was expressly excluded under the CGL policy. Under the Umbrella policy, the arbitrator concluded that: (1) as a policy of motor vehicle liability insurance it was deemed to provide SABS benefits coverage; (2) the ATV met the definition of “automobile” in the policy; and (3) coverage was not affected by the fact that there was no coverage under the OAP policy. As a result, the arbitrator concluded that the ATV was covered for SABS benefits under Farmers’ Umbrella policy, that Farmers was the primary insurer responsible for reimbursing Dominion, and for paying any future SABS benefits.

The court concluded that the decision of the arbitrator did not meet the test of reasonableness. However, the court concluded that the arbitrator had nevertheless reached the correct decision.

The court held that the arbitrator had erred in finding that the ATV met the definition of “automobile” under the Umbrella policy as it was not principally designed for and being used for transportation on public roads. The arbitrator’s finding on this point had ventured into speculation and was inconsistent with the evidence of the incident. However, this did not ultimately assist Farmers. The court noted that Endorsement No. 1 under the Umbrella policy expressly adopted and incorporated the definition of “automobile” in the underlying OAP policy. The parties agreed that the ATV met the definition of “automobile” under the OAP policy. It followed that the question of whether the ATV was an “automobile” under the OAP policy turned on whether the ATV fell within the scope of the Newly Acquired Automobile coverage.

The court turned to the previous arbitration decision involving the truck and concluded that the truck had in fact been insured under the Umbrella policy. Endorsement No. 4 to the Umbrella policy contained wording to the effect that the insurance in the Umbrella policy would still apply even if the insured (Farmers) had not maintained the underlying insurance (the OAP policy). It followed that Farmers (as owner) did insure the truck with Farmers (as insurer). As a result, the prerequisite under s. 2.2.1 of the Newly Acquired Automobile that Farmers insure all vehicles it owned was met. As the Newly Acquired Automobile provision of the OAP policy was operative, the ATV was covered under the OAP policy and all provisions of the OAP policy, including SABS benefits coverage, applied to the ATV when the incident occurred. Accordingly, the court held that Farmers was the primary insurer, dismissed the appeal and gave effect to the Funds’ cross appeal.

This case was digested by Michael J. Robinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at or or review their biographies at

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