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Drunk Driving Can Mean No Insurance Coverage > But Your Insurance Company Must Deny You in a Timely Fashion

Case Comment – Logel Estate v. Wawanesa Mutual Insurance Company (2009 Ontario Court of Appeal) upholding Buck v. Wawanesa Mutual Insurance Company (2008 Ontario Superior Court)

Being in a car accident, while driving under the influence of alcohol, can lead to a denial of your insurance policy coverage.  The other party may still sue you and have access to the statutory minimum of $200,000 in coverage, but you (as the drunk driver) may not have any protection from your insurance policy.

But your insurance company must promptly tell you that your coverage is denied.  If they don’t, then you may, in fact, benefit from your full insurance policy coverage.

In this case, the single car accident was on June 25, 2000.  The driver was on a learner’s permit and she had alcohol in her system; as a result, she breached the terms of her insurance policy and coverage could have been denied.  The driver died from this car accident and her estate had no assets.  Her insurance policy was $1 million in coverage.

Her passenger was badly hurt and sued.  It was agreed that his loss exceeded the $200,000 minimum statutory coverage.  He was seeking the benefit of the deceased driver’s $1 million insurance policy.

The insurer for the deceased driver, Wawanesa, was told of the accident right away but perhaps not the issue of drinking and driving.  It was not until January, 2002 (i.e. 18 months after the accident) that Wawanesa’s counsel had the coroner’s report which showed the blood alcohol reading.

The lawsuit was started September 2000.  Wawanesa’s counsel had the coroner’s report in January, 2002.  A defence was filed on behalf of the deceased driver (by Wawanesa) in July, 2002 – no coverage issues were raised.  Discoveries were held.

For the first time in August, 2005, Wawanesa advised of the potential for coverage issues arising.

In September, 2008, this motion sought a declaration of whether the insurance policy responding to the lawsuit was $1 million or $200,000.

It was held at the motion that Wawanesa had forfeited its ability to deny coverage to the deceased driver, by waiting until August 2005 to advise of coverage problems.  Wawanesa was held to have waived the statutory condition breach by the deceased driver (i.e. driving on a learner’s permit with alcohol in her system) because it did not advise of the denial in a timely fashion.

The Ontario Court of Appeal upheld the decision of the motions Judge.  Wawanesa is required to respond to this lawsuit with the $1 million policy coverage.

For another illustration of this issue, review our blog comment on Economical Insurance Group v. Fleming (2009 Ontario Court of Appeal).
Gregory Chang
Toronto Insurance Litigation Lawyer