Court Refuses to Extend 90-day Period for Notice of Accident Benefits Priority Dispute

Liberty Mutual Insurance Company v. Zurich Insurance Company involved an accident benefits “priority” dispute between two auto insurers. A claim for benefits had been submitted to Liberty on behalf of a 13-year old boy who had been struck by a car while riding his bicycle. Under a regulation to the Insurance Act, Liberty had 90 days within which to dispute its liability to pay benefits by serving notice on any other insurers that it claimed were primarily liable to pay.

The regulation contains a saving provision though, pursuant to which an extension of the time for giving notice can be ordered where it is determined that 90 days was not enough time for the insurer to determine that another insurer is liable to pay the benefits and that the insurer has done a reasonable investigation within the 90-day period, to see if another carrier might be liable.

In this case, Liberty was originally told that the child lived with his mother. Later, it learned that the child had actually been living as a dependent of his natural father, who had owned a vehicle insured by Zurich Insurance. However, Liberty was late in obtaining this information and as a result, served its notice on Zurich 55 days after the expiry of the 90-day period set out in the regulation.

An arbitrator ruled that Liberty was not entitled to an extension. On appeal to Mr. Justice Paul Perell, Liberty’s appeal was dismissed.

The arbitrator had found that Liberty had satisfied the requirement of showing that it had made a reasonable investigation. In fact, he noted that nineteen different types of investigation had been undertaken.

Justice Perell reviewed in detail the various steps taken by Liberty to investigate the claim. During the 90-day period, Liberty received the police report, which showed the claimant living at an address different from the one that had appeared in the application for benefits. Liberty asked the plaintiffs’ solicitor to explain this discrepancy but received no answer.

Justice Perell agreed with the arbitrator, that the information could have been obtained within the 90-day period. He quoted from the arbitrator’s ruling:

There is no doubt that the information was obtainable within the 90 days. The police report clearly indicated that Steven lived at 81 Baylawn [the father’s residence] and had a Liberty representative attended at that location they would, in all likelihood, have seen the father’s car there, obtained its licence plate number, done a Ministry of Transportation and Communication search and eventually obtained the insurance particulars which would have indicated that Zurich insured his car.

 A cautionary tale for accident benefits insurers.

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