This Note is to advise claimants and insurers of the provisions of Regulation 283/95 Disputes Between Insurers (" the Regulation"). The Regulation ensures that claimants will have access to statutory accident benefits where two or more insurers are disputing which one has the responsibility to pay accident benefits. The Regulation also requires that disputes between insurers about which insurer is required to pay accident benefits be referred to private arbitration under the Arbitration Act, 1991. Such disputes between insurers are no longer dealt with through the dispute resolution process at the Commission. A copy of this Regulation is included with this Practice Note.
BACKGROUND – SECTION 268 OF THE
INSURANCE ACT
Section 268 of the Insurance Act creates rules for determining which automobile insurance company is responsible for paying accident benefits in a given set of circumstances. The section is used to determine which insurer is liable to pay benefits when the claimant does not have an auto insurance policy of his or her own, or where coverage may be available under more than one policy. In some circumstances, s.268 requires a specific insurance company to deal with the claim. In other situations, two or more companies may be liable to
pay benefits, and a claimant may choose the insurer from which to claim benefits. An excerpt from s.268 outlining the priority rules for paying benefits is attached.
Disputes between insurers can arise in various ways. For example, in cases where a passenger involved in a car accident has no auto insurance of his or her own, it may not be clear whether the passenger looks to the insurance policy of their spouse, parents, or another vehicle involved in the accident. A spouse or dependant of a named insured must look to that policy for payment of accident benefits. A person who is not a spouse or dependant will have to look to the insurance policy of a vehicle involved in the accident.
REGULATION 283/95 – DISPUTES BETWEEN INSUREES
This Regulation ensures that accident victims will not be denied statutory accident benefits simply because the first insurer applied to for benefits thinks another insurer should pay. Section 2 of the Regulation requires the first insurer that receives an application to adjust the claim and to pay benefits to which the insured person is entitled, pending resolution of any dispute as to which insurer is required to pay benefits (see s.2 of the Regulation). The first insurer cannot refuse to pay accident benefits on the basis that the insured person may have approached the wrong insurance company.
If an insurer believes that another insurance company ought to be paying the claim, it is obliged to notify the other company
within 90 days of receiving a completed application for statutory accident benefits. It also must notify the insured person that it believes another company is responsible, and that it proposes to transfer the claim to that company. If the insured person objects to the claim being transferred, he or she must notify the insurer of the objection within 14 days. Otherwise, the insured person will not be able to participate as a party in the dispute between insurers as to which insurer should pay.
The Regulation removes these disputes between insurers from the dispute resolution process at the Commission. Disputes between insurers are now settled through private arbitration under the Arbitration Act, 1991. If the insured person has given notice that he or she objects to the transfer of the claim, the insured person, or his or her representative, may take part in the arbitration of the dispute under the Arbitration Act. All such arbitrations must be commenced within a year from the date that the first insurance company gave notice that it believes another company is liable.
OBLIGATION OF INSURERS
The Regulation requires the insurer who first receives an application for benefits to consider entitlement and adjust the claim as it would any other, including seeking an independent medical examination, or initiating the designated assessment or mediation process as appropriate. It does not allow the insurer to ignore a claim where it believes another insurer is liable to pay under s.268 of the Insurance Act.
Where the first insurer believes it is the wrong insurer and also claims that the insured person is not entitled to benefits under the Statutory Accident Benefits Schedule, it must respond to the claim on two separate fronts – issuing the notice to the insurer it believes is responsible under s.268, and following the procedures for denying a claim through the normal dispute resolution process at the Commission.
OBLIGATIONS OF CLAIMANTS
The Regulation is intended to ensure that a claimant is not caught between two insurers, each of which disputes its liability to pay benefits. However, the Regulation cannot operate properly without a clear record as to which insurer first receives an application for benefits. As a result, claimants are advised to carefully consider which insurer is obligated to pay the claim under the provisions of s.268 of the Insurance Act, before submitting an application. In order to prevent disputes over which insurer first received an application, the claimant is advised to initially submit only one application for benefits.
If the insurer to whom the application was submitted does not respond to the claim, or delays or denies coverage on the basis that another insurer is liable to pay, under s.268 of the Insurance Act, the claimant should contact the Office of the Insurance Ombudsman of the Commission. The claimant may also file an Application for Mediation against the first insurer regarding a delay in payment or failure to respond.
Under the Regulation a claimant is required to provide the insurers with all the relevant information that is needed to determine which insurer is required to pay (see s.6 of the Regulation). He or she is not required to participate in the private arbitration that will occur if the dispute is not settled. A claimant is entitled to object to the transfer of a claim (unless the claim has been made against the Motor Vehicle Accident Claims Fund – s.11) and to participate as a party in the private arbitration if he or she files an objection within 14 days of receiving notice of the dispute (see s.5 of the Regulation).
LIABILITY UNDER SECTION 268 OF THE INSURANCE ACT Act VERSUS ENTITLEMENT UNDER THE STATUTORY ACCIDENT BENEFITS SCHEDULE
In some cases insurers have expressed uncertainty about how they should deal with a claim where there is a dispute between insurers.
If the insurer's position is that the claimant is not eligible for accident benefits, then the dispute should be addressed by commencing mediation at the Commission.
If the insurer's position is that responsibility to pay belongs to another insurer, then it is a dispute under Regulation 283/95. The first insurer must notify the other insurer and the claimant, as
outlined above, and resolve that dispute through private arbitration.
If the first insurer has a number of reasons for denying the claim, some of which are based on lack of entitlement, and others based on a liability question, it should dispute the claim in the normal manner before the Commission on the entitlement dispute. It should also issue a notice under the Regulation to the insurer that it believes would be required to pay, in the event it is unsuccessful on the entitlement issues. The second insurer may seek permission to join the proceeding concerning entitlement to accident benefits started by the first insurer at the Commission.
This is a brief summary of a complex topic. Please refer to Regulation 283/95 and the Insurance Act for more precise information.
HOW DO I GET MORE INFORMATION?
The Commission telephone numbers are:
From Toronto, call: (416) 250-6714
From outside Toronto, phone: 1-800-517-2332
To reach the Office of the Insurance Ombudsman at the Commission, the telephone numbers are:
From Toronto, call (416) 250-7250
From outside Toronto, phone 1-800-668-0128
- Excerpt From the Insurance Act R.S.O 1990, C.1.8 Statutory accident Benefits
- Excerpt From the Insurance Act R.S.O 1990, C.1.8 Ontario Regulation 283/95
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Financial Services Commission of Ontario