Exclusion endorsements carry over to new vehicles, case confirms
By AdvocateDaily.com Staff
Unless an insurance company removes the Excluded Driver Endorsement, excluded drivers should always assume they won’t be covered on an insurance policy — even if they purchase a new vehicle, says Oakville personal injury lawyer Jill Edwards.
“You can’t assume you have new coverage just because you have a new car,” Edwards tells AdvocateDaily.com.
An excluded driver is someone who you intentionally remove from your auto insurance policy, explains Edwards, partner with Edwards Pollard LLP.
"This is often done to reduce high insurance premiums when a driver in the household has a poor driving record, such as high demerit points or at-fault accidents," she says. "When an excluded driver uses the vehicle, the insurance company will not provide coverage in the event of an accident."
“People sometimes have issues in their driving history that disqualify them from insurance coverage as a driver or makes it extremely expensive to purchase coverage,” Edwards says. “So, if they drive a vehicle and they are an excluded driver under that policy they are not covered if they get into an accident.”
The topic was recently discussed in a summary judgment decision from the Ontario Superior Court of Justice, in which a man who was not at fault for the accident tried to bring a tort action even though he had been deemed an “excluded driver” due to his driving record.
In his lawsuit against another driver, the court learned the plaintiff had signed the excluded endorsement some 16 months before the accident. He believed he was not covered by insurance only in relation to operating a van that he and his spouse had at the time of signing the exclusion endorsement, says the judgment. At the time of the accident, the plaintiff was driving a new vehicle but it was insured under the same policy number that had the Excluded Driver Endorsement. He testified that he thought there was a new policy with the new car, but the judge did not agree.
“Although there are situations where an honest but mistaken belief may absolve the insured, this is not one of them,” the judge wrote in his decision.
Edwards says the situation is unusual — particularly for the litigation to proceed to this point.
“Why did it take almost going to a pretrial for this issue to arise? It’s unfortunate the plaintiff went through the expense to build up his case, even almost four years after the accident, only to realize he didn’t have insurance and therefore couldn’t sue,” she says.
Adding to the confusion is the police report that indicated both drivers did have insurance, she adds. According to the written decision, proof of insurance bearing the same policy number was delivered to the accident scene and satisfied the investigating officer that a policy of insurance was in existence for that particular vehicle.
There are a few previous cases that demonstrate insurance companies don’t have an obligation to remind drivers that they remain excluded from a policy if their vehicle changes, Edwards says.
“Although it may be good customer service to remind policyholders, they are not required to do so,” she says.
But Edwards says that drivers should be warned by this case and know that if they buy a new car under the same policy number, that same policy applies for excluded drivers.