Family’s Omission Of Their Son As A Driver Qualifies As Material Breach Of Insurance Policy

Insurance policies are not things that people tend to keep top of mind, at least not until they need them. However, as we see in a recent decision from the Ontario Superior Court of Justice, it is important to disclose material changes that may impact your insurance coverage. Failure to do so may leave you and those relying on your insurance with a void policy.

The policy

The mother and father of the household had an automobile policy with the insurer. It was purchased on April 16, 2012. At the time, the insurance agent advised the father that he had “full coverage” under the policy. At that time, the couple’s son (who was a minor) had his G1 license, which is a learner’s permit. The only insured people listed on the policy were the mother and father. Both parents knew their son had a G1 license.

The son acquired his G2 license in February 2013. Again, his parents knew he obtained the license. With a G2 license, the holder is licensed to drive a vehicle alone, which is not permitted with a G1.

The insurance policy was set to expire on April 17, 2013. Just over a month prior to that, the insurer sent the mother and father a renewal offer. Section 4 of the renewal offer named the drivers covered under the policy. Once again, only the father and mother were named. The offer asked “Are any other persons in the household or business licensed to drive?” Both the mother and father answered “no” to that question. The insurance policy had an annual premium of $2,112. Had the parents indicated their son was a driver, his placement in a high-risk category would have seen their premium increase to $3,954.

The accident

On April 18, 2013, one day after the policy was renewed, the son was driving alone for the first time. He was involved in an accident not far from the family home. The other party in the accident sued for damages. It was at this time that the insurer learned that the son had been driving the car.

The father claimed he was under the impression that everyone in the house was covered. He relied on his agent’s statement that he had “full coverage” to mean “everything is covered like, anybody could like, drive it or so and if they need it.”

On September 4, 2013, the insurer returned all premiums paid to that point and advised the parents the policy was void “because our investigation has revealed that you have failed to disclose facts material to the evaluation of the risk.” The insurance company stated that the increase in the premium that would have resulted had the son been named as a driver meant the omission of his place as a driver under the policy amounted to a material breach of the policy contrary to the Insurance Act. The insurer advised the couple it would take no further action with respect to any claim against them. This meant that the son had no coverage for his accident.

The court’s analysis

The court agreed with the insurer that the parents’ omission in naming their son as a driver in their household amounted to a material breach. In the court’s decision it wrote,

“The Driver Information question was expressly asked in the PRD (as required under OAF 1). The requirement to advise of additional drivers was expressly stated (as required in the Policy under clause 1.4.1 of OAP 1). Any failure by the Applicants to have read or understood the question or requirement cannot be visited upon (the insurer). The insured had a positive obligation to volunteer the information, since a reasonable insurer would consider it relevant to assess the risk.”

Contact the exceptional personal injury lawyers at Derfel Injury Law if you have been involved in an automobile accident. We work tirelessly to achieve the best possible resolution to our client’s car accident claims. In addition to helping you bring a claim against your own insurance company when an unidentified, underinsured or uninsured motorist is at fault, the team at Derfel Injury Law can help you obtain the accident benefits to which you are entitled.  Call us at 416.847.3580 or contact us online to schedule a visit at the individual office closest to you.