THUNDER BAY — A Thunder Bay man whose car collided with another vehicle while he was delivering pizza has learned his insurance won't cover a claim that was subsequently made against him.
A Superior Court justice has sided with the insurance company, which denied his claim on the grounds that he had failed to disclose on his application that he would use the vehicle for business purposes.
The policy was rated on the basis the man used the vehicle mainly for pleasure, with a short commute to work.
But about one month following an October 2017 collision, he reported to the insurer that he had been involved in an accident while delivering pizzas.
Five days later, he cancelled his policy retroactively to the accident date, and got a small refund for the balance of his premium, as his vehicle had to be scrapped.
He later obtained a new policy from the same company for another vehicle, with the guarantee that he wouldn't use it for business.
However, two years later, the man was notified of a claim against him arising from the collision.
He wanted his insurer to cover the indemnity and his defence costs, but it refused, citing his breach of the conditions of the policy.
In court, the client submitted that the company had waived its right to deny coverage by failing to rescind the original policy immediately upon hearing about the collision.
The man's lawyer cited legal precedents to support this contention.
But Judge D.C. Shaw ruled that under Ontario's Insurance Act, failing to notify an insurer of a change in risk does not void the policy, nor is the policy automatically terminated from the date of breach.
He also stated that the same legislation stipulates the consequence of a breach: "a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited."
Justice Shaw said "The consequence of the breach of the policy affects the right to claim under the policy, not the policy itself."
Court costs of $1,500 were awarded to the insurance company.
