Atherton Barristers Home    >    What's New    >   Additional Vehicles

New Decision on Coverage for “Additional Vehicles”

By Brian C. Atherton

Atherton Barristers

The Court of Appeal in Hunter Estate v. Tompson has released a very interesting decision with respect to coverage for “additional automobiles”. The decision pertains to the wording of the standard policy in existence in 1996.

The Respondent, at the relevant time, was insured by Kingsway with respect to coverage on a 1988 van. The Respondents also owned a 1991 truck, which was not insured by Kingsway, or another insurer. It was agreed by the parties that this truck was capable of being operated as an automobile.

Within 14 days after purchasing the “new vehicle” the Respondent was involved in an accident while operating the new vehicle.

The motions Judge at first instance held that the newly required vehicle was “ an additional vehicle” in accordance with the policy wording.

The Court of Appeal disagreed and held that because there was another vehicle which, while capable of operation, was not insured by anyone else, the Respondents had failed to meet the wording of Section 2.2.1 of the policy which provided that coverage will be extended to newly acquired automobiles provided that all automobiles owned by the insureds were also insured by Kingsway.

The Court also noted that had the other automobile been insured by Kingsway, coverage would have been extended within the first 14 days after the purchase of the automobile in accordance with the terms of the policy.

The decision is somewhat odd in the sense that it opens the door to arguments that so long as the insured has some vehicle which could otherwise be defined as an automobile, and that it was capable of being operated as an automobile on a Highway, then unless it is also insured, there is no protection for newly acquired automobiles.

This opens the door to questions of whether it is a requirement that they be immediately capable of being operated on the Highway or there is some simple repair, i.e. putting a battery into the vehicle, which makes it operable.

This decision must also be read in light of the provision found in the current O.A.P. No. 1 policy, which, contains similar wording, but also has the caveat that any claim for the additional automobile must include coverage, which is provided for all of the other automobiles.

It is not difficult to imagine a situation where one vehicle, for example a convertible is only operated in the summer time, and the owner keeps comprehensive coverage on the vehicle but excludes third party liability as he does not believe he wants to drive it in the wintertime. If that individual acquires a new vehicle and is involved in an accident, and is sued, there may be a situation where third party coverage would be denied.

This case will undoubtedly lead to some interesting decisions in the future regarding what constitutes an automobile, and also has an impact on insurance agents and brokers to advise clients of the effect of only partially insuring automobiles they own, or not insuring automobiles which are capable of being operated on a Highway.

Please feel fee to contact us should you have any questions concerning this decision.