Insurance coverage denied after a car accident
Updated
The short answer
Manny Hundal defends drivers who are being sued after a car accident in Ontario when their own insurer has denied coverage, or when there was no insurance at all. He also acts for drivers when an insurer is trying to get back money it paid to the people who were hurt. Manny is a Barrister & Solicitor, called to the Ontario Bar in 2013, with an office in downtown Brampton. Consultations are in English, Punjabi and Hindi.
When an insurer denies coverage
Your car insurance is supposed to defend you if someone sues you after an accident. Sometimes the insurer refuses. These are the situations Manny sees most often:
Impaired driving
The driver had been drinking or using drugs, and may have been charged or convicted. The insurer says this broke the terms of the policy, and it refuses to defend the driver.
No insurance
The driver had no policy at all. For example, a student who could not afford insurance drives anyway and has an accident. There is no insurer to step in.
Misrepresentation
The driver had a policy, but the insurer investigates and decides the driver gave wrong information when buying it. For example, the policy lists an address in Niagara Falls, the accident happens in Brampton on a weekday, and bank statements show months of purchases in Mississauga and Brampton. The insurer decides the driver really lives in Peel and gave another address to pay less, and it denies coverage.
In each case, the people who were hurt can still sue you. The difference is that no insurer is defending you.
If you are not a Canadian citizen, an impaired driving charge can also affect your immigration status. See Criminal inadmissibility.
What the insurer can do
When an insurer denies coverage, it usually does four things:
Pays the injured people, but only up to the minimum
Ontario law still makes the insurer pay people hurt in the accident, but only up to the minimum limit the law requires, which is $200,000. If their claim is worth more, they can ask the court to make you pay the rest.
Joins the lawsuit on its own
The insurer may ask to take part in the lawsuit as a “statutory third party”. This lets it protect its own interests. It does not act for you.
Leaves you to defend yourself
The insurer will not hire a lawyer for you. You need your own.
Asks you to pay it back
If the insurer pays anything, it can come after you to recover that money. This is often called a recovery or subrogation claim.
These rules are in section 258 of Ontario’s Insurance Act:
Section 258(4)
Anything the driver did against the terms of the policy, before or after the accident, and any breach of the Criminal Code, cannot be used to refuse payment to the people who were hurt. That is why the insurer usually still pays them after a denial for impaired driving or a misrepresented address.
Section 258(11)
For any amount above the minimum limit, the insurer can rely on its policy defences again. In practice, its payment stops at $200,000.
Section 258(13)
The driver must pay the insurer back, on demand, whatever it paid only because of section 258.
Sections 258(14) and (15)
An insurer that denies coverage can be added to the lawsuit as a third party. It can then challenge who was at fault and how much the claim is worth, as if it were a defendant.
Driving without insurance
If the driver who caused the accident had no insurance, the injured person may claim from their own policy’s uninsured motorist coverage, or from the Motor Vehicle Accident Claims Fund. The Fund is run by the Ontario government and pays only when there is no insurance to pay.
The Fund pays up to $200,000 per accident for a lawsuit against an uninsured driver, plus legal costs. If it pays, the uninsured owner and driver must repay the Fund what the injured person received. Your driver’s licence is suspended until the Fund is repaid in full, or until a repayment schedule is set up. A schedule means monthly payments with no interest, and the first payment is due before your licence can be reinstated. If the debt is not paid, the government can seize and sell property or take money from wages. An insurer that paid under uninsured motorist coverage can also ask you to pay it back.
Driving without insurance can also lead to a charge and a fine under the Compulsory Automobile Insurance Act.
How Manny helps
- Reviews the denial letter and your policy, and explains in plain terms what the insurer is saying and what it means for you.
- Challenges the coverage denial itself, against your insurer, where the facts support it.
- Defends the lawsuit brought by the people who were hurt.
- Responds to recovery or subrogation claims from an insurer or the Fund.
- Deals with the insurer and the other side’s lawyers for you.
Every case depends on its facts, and no lawyer can promise a result. Manny will tell you where you stand and what your options are. Law clerks and, where needed, agent counsel support the work on each file. The office is in downtown Brampton, and consultations are in English, Punjabi and Hindi.
Documents to bring
You do not need everything for a first meeting. Bring what you have.
Deadlines
If you are served with a statement of claim in Ontario, you usually have 20 days to deliver a statement of defence. If you were served outside Ontario, you have longer. Filing a notice of intent to defend within that time gives you 10 more days.
If you do nothing, the person suing you can ask the court for a judgment against you without hearing your side. Do not ignore a statement of claim, and do not assume your insurer is handling it. Call the office as soon as you are served.
Frequently asked questions
You will need your own lawyer. The insurer may still pay the people who were hurt, up to the $200,000 minimum, but it is not defending you, and it may ask you to pay that money back. If the claim is worth more than the minimum, the rest can fall on you. A lawyer can review the denial, defend the lawsuit and deal with the insurer for you.
Yes. If the insurer pays the injured people on a claim it says it did not have to cover, it can ask you to pay it back, and it can go to court to do that. This is often called a recovery or subrogation claim. You can defend that claim, and a lawyer can check whether the denial and the amount the insurer wants are correct.
The people who were hurt can still sue you. They may also claim from their own insurance or from the Motor Vehicle Accident Claims Fund, and the Fund or that insurer can then ask you to pay it back. Your licence is suspended until the Fund is repaid or a repayment schedule is set up. You may also be charged with driving without insurance. Speak to a lawyer before you answer any claim or demand letter.
When an insurer denies coverage but may still have to pay up to the minimum limit, it can ask to join the lawsuit as a “statutory third party”. This lets the insurer protect its own interests, for example by questioning how the accident happened or how much the injuries are worth. It does not act for you, and you still need your own defence.
Usually 20 days if you were served in Ontario. Filing a notice of intent to defend within that time gives you 10 more days. If you miss the deadline, the court can give judgment against you without hearing your side, so call a lawyer right away.
Yes. Consultations at the office in downtown Brampton are in English, Punjabi and Hindi.
This page is general information, not legal advice about your situation.