Ontario Corporation Number 1009329 (Enterprise Rent-A-Car) v. Intact Insurance Company, 2019 ONCA 916

Full Decision

Ms. Adi Perets was involved in a motor vehicle collision while she was driving a rental vehicle from the Appellant in this case, Enterprise Rental Car (Enterprise). At the time of the motor vehicle collision, Ms. Perets was living with her parents and was a “listed driver” under a standard Ontario Automobile Policy (“OAP1”). The policy was issued to her father by the respondent in this action, Intact Insurance. Ms. Perets was not a named insured on her father’s policy.

Ms. Perets was named as a Defendant in an action arising out of the 2013 motor vehicle collision. The two insurers, Enterprise and Intact entered into a reservation of rights agreement pursuant to which Enterprise would defend Ms. Perets in the action until the priority dispute was resolved. In October 2017, the action arising out of the 2013 motor vehicle collision settled and Enterprise paid $30,000 towards the settlement on behalf of Ms. Perets. Enterprise in turn sought $30,000, plus $17,483 in costs from Intact, arguing that Intact was the first loss insurer.

The Court of Appeal dismissed the action brought by Enterprise. The Court argued that any priority dispute under the Insurance Act depends on the existence of coverage under the policy of insurance, and in this case, there is no coverage available to Ms. Perets under the Intact policy as her father was the named insured and not herself.

 Section 277(1.1) of the Insurance Act provides as follows:

(1.1) Despite subsection (1), if an automobile is leased, the following rules apply to determine the order in which the third party liability provisions of any available motor vehicle liability policies shall respond in respect of liability arising from or occurring in connection with the ownership or, directly or indirectly, with the use or operation of the automobile on or after the day this subsection comes into force:

  1. Firstly, insurance available under a contract evidenced by a motor vehicle liability policy under which the lessee of the automobile is entitled to indemnity as an insured named in the contract.
  2. Secondly, insurance available under a contract evidenced by a motor vehicle liability policy under which the driver of the automobile is entitled to indemnity, either as an insured named in the contract, as the spouse of an insured named in the contract who resides with that insured or as a driver named in the contract, is excess to the insurance referred to in paragraph 1.
  3. Thirdly, insurance available under a contract evidenced by a motor vehicle liability policy under which the owner of the automobile is entitled to indemnity as an insured named in the contract is excess to the insurance referred to in paragraphs 1 and 2. 2005, c. 31, Sched. 12, s. 6 (1). [Emphasis added.]

However, for section 277(1.1) of the Insurance Act to have an effect, there has to be insurance coverage, and such insurance coverage is determined by the terms of the insurance contract. While section 2.2.4 of the OAP1 provides liability coverage for rental vehicles, the rental vehicle must be rented out by the named insured or a spouse that lives with the named insured. In this case, Ms. Perets is not the named insured and is not the spouse of the named insured. As a result, Ms. Perets is not covered by the OAP1 when driving rental vehicles.

The Court also noted that the existence of OPCF 27, an optional endorsement that provided rental vehicle coverage for listed drivers, is evidence that section 2.2.4 of the OAP1 covers only policy holders and their spouses, and not listed drivers. Had the OPCF 27 endorsement been purchased by Ms. Perets’ father, Ms. Perets would have been covered under the insurance policy of Intact. The Court found that the OPCF 27 endorsement would have been redundant if the Court had adopted Enterprises argument that section 2.2.4 of the OAP1 also covered listed drivers.

Glen Bushi
Written by

Glen volunteered as a caseworker and then got promoted to litigator at the Community Legal Aid in Windsor. He also worked as a Research Assistant for the Legal Research and Writing class, and partook in the Peer Mentorship program at the University of Windsor, where he assisted first year law students deal with the challenges of law school.

Glen was awarded the Samia Rose Shaheen Memorial Award in Legal Writing and the McTague Law Firm LLP Award.

Interests: Playing Basketball and Soccer, reading political science and international relations books.