Pocket bike is not an automobile for insurance purposes: FSCO arbitrator

An insurance company has won an appeal that a motorized pocket bike should not be considered an automobile for insurance purposes under the Ontario Statutory Accident Benefits Schedule (SABS). Motors Insurance Corporation appealed the original ruling by Financial Services Commission of Ontario (FSCO) arbitrator Denise Ashby in January 2011 that a pocket bike met at least one of the three tests for classification as an automobile. In that original ruling, Motors Insurance and Bouchard, there was an agreed statement of facts that Cassondra Bouchard was injured while riding Kristin Stratton's uninsured pocket bike at Stratton's property on Jan. 13, 2008. In Adam v. Pineland Amusements Ltd., decided in 2007, the Ontario Court of Appeal developed the following three-part test to determine what is an “automobile”: • Is the vehicle an “automobile’ in ordinary parlance? If not, then, • Is the vehicle defined as an “automobile” in the wording of the insurance policy? If not, then, • Does the vehicle fall within any enlarged definition of “automobile” in any relevant statute? Ashby determined that the first two conditions did not apply in Motors Insurance, so she looked to the Off-Road Vehicles Act (ORVA). Ashby interpreted the ORVA to mean that if the pocket bike had required insurance, that would have made it an “automobile.” If so, then Bouchard should have access to accident benefits under her father's automobile policy. Ashby held that the pocket bike met the definition of an off-road vehicle under s. 1 of the ORVA, since it was “a vehicle propelled or driven otherwise than by muscular power or wind and designed to travel [on] not more than three wheels.” Section 15(1) of the ORVA goes on to require off-road vehicles to be insured under a motor vehicle liability policy in accordance with the Insurance Act, with the exception under s. 15(9) “where the vehicle is driven on land occupied by the owner of the vehicle.” Ashby concluded that the pocket bike was required to be insured under the ORVA despite the time and circumstances of the incident because s. 15(9) is a “very narrow exclusion.” However, FSCO arbitrator David Evans disagreed with this assessment in a June 20 appeal decision. He found that the pocket bike was being operated on Stratton's property when the incident occurred. In those circumstances and at that time, the ORVA did not require Stratton's pocket bike to be insured under an automobile insurance policy. Therefore, Bouchard was not operating a motor vehicle and was not involved in an accident within the meaning of s. 2(1) of the SABS. The appeal was allowed in favour of Motors Insurance.

Anti-Fraud Task Force committee seeks public input on proposed measures to combat auto insurance fraud

The Steering Committee of the Ontario Auto Insurance Anti-Fraud Task Force is seeking public comment on several potential recommendations before it submits its final report to the government in the fall of 2012. The steering committee also reported its difficulty in pegging a precise dollar figure to Ontario auto fraud, citing a KPMG study that put auto insurance fraud in 2010 anywhere in the neighbourhood of between $769 million and $1.6 billion. The steering committee report goes on to note that Ernst & Young is reviewing the KPMG figures. Ernst & Young has indicated that KPMG may be underestimating the extent of overall auto insurance fraud in Ontario “because it does not specifically address premeditated fraud, which, as Ernst & Young noted, could range between $130 to $260 million per year.” The steering committee is seeking public input on the following anti-fraud initiatives, among others: • Regulation of health clinics. • Regulation of the towing industry. The Steering Committee of the Ontario Auto Insurance Anti-Fraud Task Force is seeking public comment on several potential recommendations before it submits its final report to the government in the fall of 2012. The steering committee also reported its difficulty in pegging a precise dollar figure to Ontario auto fraud, citing a KPMG study that put auto insurance fraud in 2010 anywhere in the neighbourhood of between $769 million and $1.6 billion. The steering committee report goes on to note that Ernst & Young is reviewing the KPMG figures. Ernst & Young has indicated that KPMG may be underestimating the extent of overall auto insurance fraud in Ontario “because it does not specifically address premeditated fraud, which, as Ernst & Young noted, could range between $130 to $260 million per year.” The steering committee is seeking public input on the following anti-fraud initiatives, among others: • Regulation of health clinics. • Regulation of the towing industry. • Enhanced authority for the Financial Services Commission of Ontario (FSCO), including the ability to regulate the business practices of health care treatment and assessment facilities. • Tightened controls on the delivery of auto accident benefits, including a proposal that would allow insurers to bill claimants $500 as “a form of cost recovery” if claimants fail to attend a medical examination requested by the insurer. • An ability to share personal information in a way that conforms with privacy legislation, but that would allow insurers and authorities to detect and prevent fraud. • Providing insurers with broader civil immunity, so that insurers might be protected from civil suits for reporting to regulators or the police when they have suspicions of fraudulent behaviour by their own policyholders.

Insurer cannot pro rate attendant care based on economic loss: Ontario Court

An Ontario Superior Court judge has held that an insurer cannot take a proportional approach to the payment of attendant care benefits based on the extent of the economic losses suffered. In Henry v. Gore Mutual Insurance Company, the insurer argued that its liability for attendant care benefits was limited to the number of hours that the attendant care provider lost from work. Ontario Superior Court Justice Timothy Ray, however, ordered that Gore Mutual had to pay the full amount of attendant care benefits as set out in the standard auto insurance policy in Ontario. In Henry, an 18-year-old man catastrophically injured in a motor vehicle accident elected to have his mother provide attendant care. The mother took a leave of absence from her full time employment at a retail store to care for her son. The attendant care needs were assessed at $9,500 per month, with the maximum payable by Gore Mutual of $6,000 per month to a lifetime maximum of $1 million, as agreed upon by a Form 1 assessment. Gore calculated that its liability for attendant care payments to the injured victim (applicant) should be limited to the number of hours that the victim’s mother was working as a proportion of the total attendant care hours assessed, or a pro rated version of the $6,000 per month. Specifically, Gore took the position that if the service provider — the applicant’s mother — could show that she had sustained an economic loss, then the expense payable would be to indemnify her to the extent of her financial loss, according to court documents. However, rather than paying her lost income, Gore calculated her number of hours and paid her a proportion of the attendant care expense. The court found in favour of the applicant. In his decision, Ray wrote: “A plain reading of the section provides that if a family member stays home from work, loses income in order to provide all reasonable and necessary attendant care to the insured — and the insured is obligated to pay, promises to pay or does pay the family member, then the definition in section 19(1) has been met. All reasonable and necessary attendant care expenses must then be paid to the insured as described in the Form 1.” (emphasis in original ruling)

Sunrise Propane explosion in Toronto causes more than $25 million in property damage: lawsuit

The law firms representing plaintiffs in an action arising out of a deadly propane explosion in Toronto four years ago report the blast caused more than $25 million in property damage. One employee and an emergency responder died following the massive explosion at the Sunrise Propane distribution plant on Aug. 10, 2008. About 12,500 residents had to be evacuated, notes a statement from Stevensons LLP, Falconer Charney LLP and Sutts Strosberg LLP. The claim includes facts that have not yet been established in court. Class counsel in this matter include Harvin Pitch of Stevensons LLP, Theodore P. Charney of Falconer Charney LLP and Harvey and Sharon Strosberg of Sutts Strosberg LLP. The action has been certified as a class action by the Ontario courts, the statement notes. The certification order allows the matter to proceed against the defendants, including Sunrise Propane Energy Group Inc., the Technical Standards and Safety Authority and a number of suppliers to Sunrise Propane.

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Man in default of auto accident judgments cannot challenge their validity in follow-up actions to recoup amounts: court

A man in default of two court judgments ordering him to pay a total of $80,000 in damages to two injury victims in a 1992 auto accident is not entitled to challenge the validity of those judgments in subsequent actions intended to recoup the outstanding payments, the Court of the Queen’s Bench in Alberta has found. Maurice Riendeau did not defend himself and was noted in default in a personal injury action arising from a September 1992 auto accident, in which Arlene Helen Zawaski and Shawn Bruce McNamara (a passenger in Zawaski’s car) were injured. Zawaski and McNamara commenced an action against Riendeau, who was noted in default, and Alberta’s Administrator of the Motor Vehicle Accident Claims Act stepped in to defend the claims on behalf of Riendeau. After serving Riendeau personally and hearing nothing back, the administrator consented to — and paid — the judgments entered against Riendeau ($35,159.84 to Zawaski and $44,888.78 to McNamara). The administrator later filed renewal actions to recoup payments in both the Zawaski and McNamara judgments in 2006-07, following a $500 payment Riendeau made against the Zawaski judgment in order to restore his driver’s licence when he moved back to Alberta. Riendeau filed statements of defence and counterclaims against the administrator’s renewal actions in an effort to recover the $500 he paid for the Zawaski judgment. The administrator sought summary judgment in the renewal actions and a summary dismissal of Riendeau’s counter-claims on the basis that the court had already adjudicated the Zawaski and McNamara matters. The court agreed with the administrator. “I am satisfied that the circumstances of this particular case warrant the application of the doctrine of res judicata [a legal term referring to a matter already adjudicated],” Alberta Court of Queen’s Bench Justice D.R.G. Thomas wrote for the court. “Further, there is evidence that the amount of $500 was paid by Riendeau on the Zawaski judgment on Mar. 21, 2006. That is evidence that he recognized and accepted the validity of the Zawaski and McNamara judgments. He is now estopped [prevented] from challenging their validity on the basis of this one payment, notwithstanding his claim that he had to make the payment to renew his Alberta driver’s licence.”

Key driving behaviours better indicators of risk than traditional rating variables: Progressive

Key driving behaviors — for example, actual miles driven, braking and time of day of driving — can predict the likelihood of a claim far better than traditional insurance rating variables such as a driver's demographic profile, age, and the year, make and model of the insured vehicle, research by Progressive suggests. Progressive released new findings from an analysis of 5-billion real-time driving miles, concluding that driving behavior has more than twice the predictive power of any other insurance rating factor. Loss costs for drivers with the highest-risk driving behavior are approximately two and a half times the costs for drivers with the lowest-risk behavior, Progressive says in a press release. The company believes the results suggest auto insurance rates can be far more personalized than they are today. Progressive has been collecting and analyzing real-time driving data for 15 years. It says it has doubled the number of miles it has analyzed in the last 18 months since the launch of Snapshot, a usage-based insurance (UBI) program. “It's a case where the data confirms everyone's intuition,” said Progressive president and CEO Glenn Renwick. “We believed that driving behavior was the most predictive rating factor — but didn't expect the difference to be this dramatic. Actual driving behavior predicts a driver's risk more than twice as strongly as any other factor. “It shows that we're not members of an arbitrary actuarial class — we're individuals with our own set of driving habits, which should be reflected in the price we pay for our insurance.” Progressive found that 70% of drivers who signed up for its Snapshot UBI program paid less for their insurance, with customers saving an average of $150 a year.