Lent Car, Misrated Principal Driver, and an Injured Third Party
Helen owns a 2019 Toyota RAV4 and insures it with a standard Ontario auto policy. She lists herself as principal driver and her son Kyle, 22, as an occasional driver, even though Kyle drives the car to work five days a week and Helen takes transit. In June, Kyle lends the car to his friend Devon, who has a valid Ontario G licence but no insurance of his own. Devon runs a red light and strikes another vehicle, injuring the other driver and causing $18,000 damage to that vehicle. Devon is charged with careless driving. The insurer's investigation shows Kyle drove about 18,000 km last year while Helen drove 2,000 km. Helen says she 'didn't think it mattered' because Kyle was listed. The other driver has no collision coverage.
1. Is Devon an insured driver under Helen's policy? Explain the relevant Ontario auto policy provisions and any exclusions that could apply.
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Under the Ontario Automobile Policy (OAP 1), an insured person includes the named insured and any person who drives the vehicle with the named insured's consent. Kyle was entrusted with the car and lent it to Devon; Devon has a valid Ontario G licence and is not listed as an excluded driver under OPCF 28. A careless driving charge is not an exclusion. So Devon is an insured driver for this loss, and Helen's insurer must respond to third-party liability claims up to the policy limit.
There are caveats: if Devon took the car without consent, or if the policy contains a valid exclusion for a driver who is a regular user but unlisted, coverage could be disputed. The insurer may also argue that Kyle's own driving pattern was misrepresented, but that is a separate issue from Devon's status.
2. How does the misdescription of Kyle as an occasional driver affect coverage for this loss, and what should the broker have done?
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Listing Kyle as an occasional driver when he drives 18,000 km a year and Helen drives 2,000 km is a material misrepresentation of the principal driver, a rating factor that goes to the core of the risk. Under the Insurance Act and the OAP 1, an insurer may deny or void coverage if the misrepresentation is material and induced the contract. The insurer would need to show it would have charged a different premium or declined the risk. The practical result is often a dispute rather than automatic denial, and the insurer still has a duty to defend third-party claims until the issue is resolved.
The broker should have asked who drives the vehicle most often and recorded annual kilometres. Helen also had a duty to disclose a material change in risk when Kyle's use increased. The broker should correct the policy now and document the disclosure.
3. How will the injured other driver's claim proceed - what benefits and property damage coverage apply under Ontario's auto regime?
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Accident benefits (SABS). The injured driver claims statutory accident benefits from the priority insurer - generally the insurer of the vehicle in which they were injured or the vehicle involved. Here that is Helen's insurer. Benefits include medical and rehabilitation, attendant care, income replacement or non-earner benefits, and death benefits, subject to the SABS schedule and any election. Fault does not determine SABS entitlement.
Property damage (DC-PD). Ontario's Direct Compensation–Property Damage coverage is mandatory. The injured driver's own insurer pays for damage to their vehicle regardless of fault, up to the policy limit and subject to the deductible, because another identified Ontario vehicle caused the damage. 'No collision coverage' does not eliminate DC-PD; collision and DC-PD are separate coverages. If the driver had no policy at all, other priority rules would apply.