Rental Car Coverage: Were the words dull and hypothetical?
In the June 5, 2018 Divisional Court ruling in Enterprise Rent-A-Car v. Intact, 2018 ONSC 3517, Enterprise appealed the judgment of Justice Morgan of the Superior Court concerning the hierarchy of coverage provisions of s. 277(1.1) of the Insurance Act applying to the use or operation of a leased vehicle. It reads much like the overlaid simplicity of Tragically Hip lyrics belying their depth.
Arising from a June 29, 2013 accident, the driver of the rental vehicle, also listed upon her father’s policy with Intact, became a defendant in the injured plaintiff’s tort action. Enterprise ultimately contributed to settlement of that action and sought recovery from Intact by way of court application. His Honour dismissed the application finding that s. 277(1.1) did not apply.
On appeal, the Divisional Court decided the standard of review as either correctness or palpable and overriding error. Neither standard was breached presumably, as the panel of three unanimously upheld the finding of the lower court without further comment upon it. The hierarchy of priority of coverage is: lessee (which is defined in subsection (4)), followed by the driver and then the owner of the rental vehicle. Enterprise could only have excess coverage if Intact fell within the first two tiers. The panel confirmed Court of Appeal authority requiring the coverage to be ‘available’ in denying it extended to only a driver listed upon the Intact policy. It was felt clear from Intact’s OAP 1, although the language is a bit tortured, that coverage would extend to a vehicle only when rented by the named insured (the father) or his spouse and driven by either of them. Enterprise argued paramountcy of the statute over the contract of insurance believing there to be a discrepancy in paragraph 2 of the statutory provision. The panel rejected any discrepancy and found the converse was the proper interpretation in that the statute can’t create coverage; it first has to founded under the terms of the policy before the statute is engaged. Since paragraphs 1 and 2 of the statute were not triggered, coverage fell to Enterprise’s insurer considering Enterprise as owner of the vehicle. Costs were fixed and payable to Intact.
Know your coverage. Don’t let the constellations reveal themselves one star at a time when you drive back to town this morning.