Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff sought insurance coverage after being named in a personal injury action involving a leased vehicle.

• Dispute focused on whether the vehicle was covered under a fleet policy at the time of the accident.

• Court interpreted the OPCF 21A endorsement and found the vehicle met the policy’s coverage conditions.

• Insurer’s denial based on late monthly reporting and lack of prior notification was rejected.

• The breach of statutory reporting conditions was deemed minor and did not justify loss of coverage.

• Relief from forfeiture was granted due to lack of prejudice to the insurer and disproportionate consequences for the insured.

Plaintiff sought insurance coverage after being named in a personal injury action involving a leased vehicle

West York Sales and Leasing Inc. applied to the court seeking a declaration that it was entitled to coverage under a commercial automobile liability insurance policy issued by The Dominion of Canada General Insurance Company, operating as Travelers Canada. The case arose from a 2020 motor vehicle accident in which a pedestrian was struck by a vehicle leased by West York to Platinum Car and Truck Rental, which had further rented it to a third party. That party had loaned the vehicle to another individual, who was driving at the time of the incident.

Travelers denied coverage nearly three years after the accident, citing the late inclusion of the vehicle in a monthly fleet report and the failure of the insured to notify them of the accident in a timely manner. West York challenged this denial, arguing that the vehicle was covered under the policy terms and that any procedural breach was minor or excusable.

The vehicle met the criteria for coverage under the policy

The policy in question included an OPCF 21A endorsement that applied to vehicles owned or leased for over 30 days and covered under a fleet structure with monthly reporting. The court found that the vehicle met all qualifying conditions—it had been owned and leased in the appropriate manner and had been previously listed on monthly fleet reports. It was temporarily removed due to mechanical repairs and later reintroduced in the August 2020 report, which was submitted a few weeks late. The court held that the endorsement’s language clearly included such vehicles and that listing the vehicle post-accident did not invalidate coverage, especially since premiums were accepted without objection.

The insurer’s late-reporting argument was undermined by course of conduct

Travelers argued that the August report was filed too late to trigger coverage. However, the court reviewed the parties' past dealings and determined that late submissions had regularly been accepted without affecting coverage. The insurer never warned of lapses, never returned premiums, and failed to prove that the vehicle was excluded based on timing. As a result, the court rejected the claim that late filing constituted a material breach of the policy.

Breach of reporting conditions was excused under relief from forfeiture

Platinum, the lessee, failed to report the accident to Travelers, and repairs were completed without insurer involvement. Nonetheless, the court found that West York, as lessor, had no knowledge of the accident and could not be held responsible for Platinum’s omissions. Even if there was technical non-compliance with statutory conditions under the standard auto policy, the court ruled it was a minor breach. Applying the doctrine of relief from forfeiture, the judge held that the failure to report did not prejudice Travelers and that denying coverage in a $1 million liability case would be grossly disproportionate to the breach.

Outcome affirmed coverage and duty to defend

The court granted West York's application and declared that Travelers owed a duty to defend in the underlying personal injury action. The court emphasized that commercial fleet policies are designed to accommodate changes in vehicle use and should not be interpreted in a way that frustrates their purpose. Additionally, the ruling confirmed that relief from forfeiture remains a robust tool to protect insured parties from undue hardship caused by minor breaches that do not materially affect the insurer's position.