Source One was a lienholder on a vehicle owned by Eric Santos. On January 28, 2013, Progressive Insurance issued a "verification of insurance," or binder, that was provided to Source One.
Santos's first premium payment bounced. On February 8, 2013. Source One received a notice of rescission from Progressive. The notice was dated February 1, 2013 and was purportedly effective on January 28, 2013.
On March 3, 2013, the vehicle was towed as a result of a loss and Source One received possession of the vehicle. Progressive refused to pay the claim filed by Source One on the ground that the policy had been rescinded.
In Source One Financial Corp. v. Progressive Direct Ins. Co., 2015 WL 6739184 (Mass. App. Div.), the Massachusetts Appellate Division held that Progressive did not follow the cancellation procedure required by Mass. Gen. Laws ch. 175 § 113(A)(2). Under the statute, "no cancellation of the policy . . . shall be valid unless written notice thereof is given by the party proposing cancellation . . . at least twenty days in each case prior to the effective date thereof." The statute does not provide for rescission.
The court held that failure to comply with the requirements for cancellation means that the parties are in the same position as if no notice were ever sent.
The court rejected Progressive's argument that the insurance policy was a nullity due to failure of consideration. "The promise to purchase the policy made by Santos at the time the binder was issued" satisfied the consideration requirement. "The failure of consideration is not available to Progressive to avoid this policy. The failure of performance, that is, Santos's failure to pay the promised premium, is different even under contract law than utter lack of consideration."
The court held that the policy could not be rescinded because there was no fraud, accident, mistake, or gross inequity.
I understand this case in principle. By retroactively cancelling (or "rescinding") the insurance, Progressive failed to comply with the statutory requirement of giving twenty days notice. Therefore, the insurance was never cancelled.
But what if Progressive had complied with the statutory requirements, and the accident had happened within the twenty day notice period? A policy that was never paid for would nevertheless provide coverage.
Tuesday, November 17, 2015
Insurance News - Tuesday, November 17, 2015:
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, November 17, 2015:
- Ontario Conservatives seek to regulate Uber, AirBnB and the sharing economy province-wide.
- Insurer cancelling policies of UberX drivers: “considered commercial use and is unacceptable for personal vehicles”.
- Uber says it needs self-driving cars to avoid ending up like the taxi industry.
- A decline in accident frequency due to safer vehicles and the adoption of autonomous vehicles could shrink the U.S. personal auto insurance sector by 60 percent within 25 years,
- Ready or not, Tesla Autopilot means self-driving cars are already on Canadian roads.
- Public consultation on Ontario tow truck regulations coming to a close.
Thursday, November 12, 2015
Insurance News - Thursday, November 12, 2015
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, November 12, 2015:
- Ontarians pay more than double in car insurance than in some provinces.
- Trial lawyers have updated their report on profitability in the Ontario auto insurance market.
- Self-driving cars will be tested on Canadian roads in 2016.
- Car companies intend to accept full liability for self-driving car accidents.
- Tesla just beat Google to make the self-driving car.
- Could Google be auto-piloting itself into the insurance business?
Open Season - its time to review your health insurance plan
Even though you may be out of work receiving workers compensation from OWCP, you still need to stay on top of your health insurance enrollment. OWCP, and the federal government in general, no longer mail out brochures. You need to research any changes you might need to make and get your forms from the OPM website. A good place to start is here:
Please keep in mind that if you become eligible for Medicare, that is now considered your primary insurance and you need to change to a version of your health insurance plan that takes into account that you have Medicare as primary and health insurance as secondary. Otherwise you are paying too much for your health insurance. I have a client who reduced her health insurance premium from $800 per month to $200 per month by making this change. This is not a change that is limited only to Open Season. Becoming eligible for Medicare is an event that allows you to immediately change your health insurance enrollment without waiting for Open Season. The OPM website explains:
Can I Change My FEHB Enrollment When I Become Eligible for Medicare?
Yes, you may change your FEHB enrollment to any available plan or option at any time beginning 30 days before you become eligible for Medicare. You may use this enrollment change opportunity only once. You may also change your enrollment during the annual Open Season, or because of another event that permits enrollment changes (such as a change in family status).
Another change is that beginning this coming year every plan must include an option for self plus one in addition to the previous choices of individual and family; this includes dental insurance.
Be sure to go to the OPM website to get started:
https://www.opm.gov/healthcare-insurance/open-season/
Wednesday, November 11, 2015
Loss Transfer and the Fault Determination Rules
The Court of Appeal recently considered the interplay of the Fault Determination Rules in a loss transfer context.
In State Farm Mutual Automobile Insurance Co. v. Old Republic Insurance Co. of Canada, 2015 ONCA 699 (C.A.), there was a multi-vehicle collision in which a Pepsi truck rear-ended a Dodge, which in turn rear-ended a Nissan. Old Republic insured the Pepsi truck and State Farm insured the Nissan. The driver of the Nissan collected accident benefits from State Farm, which in turn sought to be indemnified by Old Republic under the loss transfer provisions of the Insurance Act. The issue on appeal was whether the Pepsi truck was only responsible for the initial collision with the Dodge or whether it was responsible for the entire chain reaction.
The Court of Appeal held that the Pepsi truck (and its insurer, Old Republic) was 100% responsible only for the collision between it and the Dodge, not the entire chain reaction. As a result, Old Republic was not required to indemnify State Farm for accident benefits paid to its insured.
The Court's interpretation helps to clarify an area in which there was previously conflicting lines of case law.
In State Farm Mutual Automobile Insurance Co. v. Old Republic Insurance Co. of Canada, 2015 ONCA 699 (C.A.), there was a multi-vehicle collision in which a Pepsi truck rear-ended a Dodge, which in turn rear-ended a Nissan. Old Republic insured the Pepsi truck and State Farm insured the Nissan. The driver of the Nissan collected accident benefits from State Farm, which in turn sought to be indemnified by Old Republic under the loss transfer provisions of the Insurance Act. The issue on appeal was whether the Pepsi truck was only responsible for the initial collision with the Dodge or whether it was responsible for the entire chain reaction.
The Court of Appeal held that the Pepsi truck (and its insurer, Old Republic) was 100% responsible only for the collision between it and the Dodge, not the entire chain reaction. As a result, Old Republic was not required to indemnify State Farm for accident benefits paid to its insured.
The Court's interpretation helps to clarify an area in which there was previously conflicting lines of case law.
Thursday, November 5, 2015
FSCO Mandate Review Undecided on Auto Rate Regulation
The preliminary report by Panel reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) has been made public by the Ministry of Finance. Panel members are George Cooke, Lawrence Ritchie and James Daw.
The report is virtually silent on how auto insurance rates should be regulated in the province.
The report recommends the creation of a regulatory body - the Financial Services Regulatory Authority (FSRA). The FSRA would be self-funded and arm's-length from the government. There would be three distinct functions - pension regulation, prudential regulation and market conduct regulation. Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.
The FSRA would have a board of directors and reporting to the board would be a CEO. Each regulatory function would be headed by a Superintendent. The FSRA would have rule making authority.
FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.
The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process.
The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario. The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.
At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.
Feedback on the preliminary report is being solicited by the government. The deadline is December 14, 2015. A final report will submitted to the government in the winter
The report is virtually silent on how auto insurance rates should be regulated in the province.
The report recommends the creation of a regulatory body - the Financial Services Regulatory Authority (FSRA). The FSRA would be self-funded and arm's-length from the government. There would be three distinct functions - pension regulation, prudential regulation and market conduct regulation. Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.
The FSRA would have a board of directors and reporting to the board would be a CEO. Each regulatory function would be headed by a Superintendent. The FSRA would have rule making authority.
FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.
The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process.
The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario. The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.
At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.
Feedback on the preliminary report is being solicited by the government. The deadline is December 14, 2015. A final report will submitted to the government in the winter
Wednesday, November 4, 2015
Supreme Court Dismisses Westerhof Appeal
We previously blogged on Westerhof v. Gee, where the Court of Appeal held that non-party experts such as treating health practitioners may give opinion evidence formed in the course of treatment or based on observations formed outside of the litigation (such as accident benefits assessments).
The case was appealed to the Supreme Court of Canada. On October 29, 2015, the Supreme Court dismissed the application for leave to appeal. As a result, non-party experts will continue to be permitted to give opinion evidence without complying with r. 53.03, subject to the court's gatekeeper function.
The companion appeal in Baker v. McCallum was also dismissed.
The case was appealed to the Supreme Court of Canada. On October 29, 2015, the Supreme Court dismissed the application for leave to appeal. As a result, non-party experts will continue to be permitted to give opinion evidence without complying with r. 53.03, subject to the court's gatekeeper function.
The companion appeal in Baker v. McCallum was also dismissed.
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