Your insurer denied coverage after a car accident
Updated
The short answer
When a car insurer denies coverage after an accident in Ontario, it refuses to defend the driver, and it may pay the people who were hurt and then demand that money back from the driver. Manny Hundal defends drivers in that position. He reviews the denial, challenges it where the facts support it, defends the lawsuit and responds to the insurer’s claim for repayment, including claims involving subrogation or an assignment of rights. He acts for the driver, never the insurer. He also acts for drivers who had no insurance at all.
What a coverage denial means
If you cause an accident, your car insurance is supposed to do two things: pay the people who were hurt, and hire a lawyer to defend you if they sue. A coverage denial is a letter from your insurer saying it will not do that. It often comes after the insurer has investigated the accident and your policy.
A denial does not end the matter. The people who were hurt can still sue you, and the insurer may still pay them and then ask you to pay it back. The denial is the insurer’s position, not a court decision, and in some cases it can be challenged.
Why insurers deny coverage
These are the reasons 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 pay or defend.
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.
Another breach of the policy
The insurer says the driver broke a different condition of the policy. The denial letter should say which one.
In each case, the people who were hurt can still sue you. The difference is that your insurer is not 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.
If there was no insurance at all
Sometimes there is no policy to deny. For example, a student who cannot afford insurance drives anyway and has an accident. 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 may be 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, so the insurer pays and defends as the policy requires.
- 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, you can be noted in default, and 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
Sometimes. A denial is the insurer’s position, not a court decision. Manny reviews the letter, the policy and the facts, and where they support it, he challenges the denial so the insurer pays and defends as the policy requires. No lawyer can promise a result, so get advice early, before you answer the insurer.
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 may be 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, you can be noted in default and 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.