Disputes Between Insurers – When does the notice period begin to run?

ING Insurance Company of Canada v. State Farm Insurance Company, [2009] 97 O.R. (3d) 291 (S.C.J.)

This case involved a dispute between insurers as to who was responsible for paying the claimant’s accident benefits. The claimant did not have insurance of her own, but her father had a policy with ING to which she would be entitled if she was “principally dependant” on her father at the time of the accident. State Farm was the at fault party’s insurer. ING initially paid some minor expenses prior to receipt of a completed OCF-1. After receiving the completed application for benefits, ING concluded that the claimant was not principally dependant and sent a Notice to Applicant of Dispute Between Insurers to the claimant and to State Farm within 90 days of the receipt of the OCF-1. Regulation 283/95 provides that the Notice must be sent within 90 days of a “completed application” for benefits. The issue in this case was the meaning of “completed application”. State Farm argued the notice period began earlier than the OCF-1 given ING’s decision to pay benefits; ING argued the applicable date was when the OCF-1 was received.

The court held that the plain language of the Regulation means that the 90 days begin to run when the OCF-1 is received. ING’s decision to pay benefits was the proper thing to do and the purpose of the Regulation is to encourage good claims handling, not penalize insurers.

The interpretation used by the court in this case provides certainty to the 90 day limitation period for serving notice. If the 90 day notice period begins to run at some point prior to the OCF-1 being received, the limitation becomes a more nebulous item and could encourage insurers to avoid making payments until priority disputes are settled. This could disadvantage claimants, contrary to the intentions of the accident benefits scheme. This decision seems to be a sensible way to provide certainty to insurers.

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