Gallagher v. Todish et al.
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The Facts
An insurer first sent Tammy Todish a notice cancelling her auto policy for unpaid premiums. She paid the arrears and stayed insured for several months. She then received a second notice, worded the same way, giving a cancellation date of October 13, 2014. On November 25, 2014 she rear-ended Kellie Gallagher. Gallagher sued Todish, who did not defend, and another insurer, Desjardins, was drawn into the case. Desjardins brought a third-party claim against the cancelling insurer, Pafco. Pafco moved for summary judgment to dismiss that claim, saying the policy had ended in October. Desjardins cross-moved for a declaration that Pafco's policy was in force on the accident date. The argument turned on whether the second notice complied with the statutory conditions for terminating an Ontario auto policy.
What the Court Decided
The judge granted summary judgment to Pafco and dismissed the claim against it, so Todish had no effective policy on the day of the collision. The judge began from the usual rule that an auto insurer's right to terminate is narrow and the statutory conditions must be followed closely, and that a defective notice leaves the insurer bound. Three complaints about the notice were then rejected. The words 'guaranteed funds' were enough, because they cover the payment methods the regulation lists and tell the insured how to pay; the judge acknowledged that some tribunal decisions had struck down notices for leaving the individual methods out. The lack of a payment address did not invalidate the notice, since Todish had received the same kind of notice months earlier and knew what to do. And giving a deadline, the steps to keep the policy, and a phone number for the agency was enough to meet the purpose of the rule, which is to prevent unfair treatment of insureds. The earlier payment of arrears was treated as evidence she understood the notice.
People often assume that any flaw in a cancellation notice keeps the policy alive. This decision shows the limits of that argument: Ontario courts require close compliance, but they look at substance and at what the insured actually knew. For a driver sued after a collision, the result was that no insurer stood behind them. For an injured person, it is a reminder that the notice and its timing must be checked early, because the answer decides whether an insurer or the Motor Vehicle Accident Claims Fund pays. Each case turns on its own notice wording and facts.
Does This Affect You?
- ✓Your auto insurer says it cancelled your policy for missed or returned payments before the collision.
- ✓You were hit by a driver whose policy was cancelled for non-payment and you are working out who can be sued.
- ✓You received more than one cancellation notice, paid arrears after the first, and then had an accident after the second.
Key Takeaways
- A cancellation for non-payment is only effective if the notice follows the statutory conditions, and courts require close compliance.
- Small wording differences, such as 'guaranteed funds' instead of listing each payment method, may not defeat a notice, especially where the insured had been through the process before.
- Whether a policy was in force on the accident date often decides whether an insurer or the Fund responds, so the notice should be examined as soon as a claim arises.