The Ontario Superior Court of Justice has upheld an arbitrator’s decision that a woman injured in a motor vehicle accident while driving a rental car was not covered by the car owner’s insurance.
In Economical Insurance Co. v. Trafalgar Insurance Co., 2023 ONSC 5060, Jatinderjit Rakhra was injured in a motor vehicle accident. She was driving a 2009 Chevrolet Aveo that she had rented from a car rental company. The vehicle was owned by Satkar Auto Services and Sales. Economical Insurance was Satkar’s insurer and Trafalgar Insurance was the insurer of the car that Rakhra rear-ended.
The case involved a priority dispute between the insurance companies. An arbitrator found that Rakhra was not insured by Economical and was not entitled to statutory accident benefits from Economical. Trafalgar appealed the arbitrator’s decision to the Ontario Superior Court of Justice.
The Ontario Superior Court of Justice has upheld an arbitrator’s decision that a woman injured in a motor vehicle accident while driving a rental car was not covered by the car owner’s insurance.
In Economical Insurance Co. v. Trafalgar Insurance Co., 2023 ONSC 5060, Jatinderjit Rakhra was injured in a motor vehicle accident. She was driving a 2009 Chevrolet Aveo that she had rented from a car rental company. The vehicle was owned by Satkar Auto Services and Sales. Economical Insurance was Satkar’s insurer and Trafalgar Insurance was the insurer of the car that Rakhra rear-ended.
The case involved a priority dispute between the insurance companies. An arbitrator found that Rakhra was not insured by Economical and was not entitled to statutory accident benefits from Economical. Trafalgar appealed the arbitrator’s decision to the Ontario Superior Court of Justice.
The arbitrator further found that the “lease to own” arrangement is very different from “used car sales”, particularly where the vehicle is used as part of a rental fleet, because of the increased risk of exposure far beyond that contemplated in the underwriting process. In particular, he found that Economical did not insure rental companies because of the increased risk of claims, particularly accident claims. The court found no manifest and substantial errors in the arbitrator’s findings of fact.
The arbitrator also found that the car was expressly excluded from the contract. The arbitrator found that the car was made available for regular or frequent use by a person who was not an active partner or employee of Satkar. Accordingly, the arbitrator ruled that the Economical policy did not cover the Aveo and did not respond to Rakhra’s claim for accident benefits, so that Trafalgar was the preferred insurer.
The court found that the arbitrator had correctly stated the law that “a vehicle owned by the insured and made available to another entity for its regular or frequent use is an excluded vehicle for which there is no coverage under a garage policy”.
Ultimately, the court held that the arbitrator had not made any clear and overriding factual errors and had correctly applied the law. The Economical policy did not cover the Aveo because it was not an “owned vehicle” as defined and was specifically excluded.
