Accident Victim Reasonably Assumed His Insurance was Valid

April 03, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

DID INSURED KNOW HIS INSURANCE WAS CANCELLED – Cultural sensitivity; barter; business on reserves; onus of proof on Insurer to show expectation of insurance was unreasonable

Smith and Aviva

Date of Decision: February 13, 2017
Heard Before: Adjudicator Janette Mills


Mr. Smith was injured in a car accident on July 26, 2014 when he riding Harley Davidson motorcycle. He was hit by a car. The accident left him with serious head injuries and multiple broken bones, bleeding internally, which resulted in the removal of his spleen. Mr. Smith was in a coma for six days, and remained in hospital for a couple of weeks. There was no dispute regarding the extent and seriousness of Mr. Smith’s injuries. At the time of the accident, Mr. Smith was in possession of an Allstate Insurance Card and sought accident benefits from Aviva, payable under the Schedule. When the parties were unable to resolve their disputes through mediation, Mr. Smith applied for arbitration at the FSCO.

The issues in this Preliminary Issue Hearing are:

  1. Was Mr. Smith insured at the time of the accident?
  2. If not, did Mr. Smith know or ought he reasonably to have known that the motorcycle he was operating was not covered by an insurance policy, which would trigger the exclusion in section 31(1)(a)(i) of the Schedule to invalidate Mr. Smith’s right to benefits?


  1. Mr. Smith was not insured at the time of the accident.
  2. Mr. Smith did not know nor ought he reasonably to have known that the motorcycle he was operating was not covered by an insurance policy, so the exclusion in section 31(1)(a)(i) of the Schedule does not apply.


Mr. Smith is 44, lives on the Six Nations of the Grand River Territories Reserve in Brantford. He and his family are full-status native Indians. Mr. Smith was raised on the Reserve and has spent most of his life living there, as has his family.

Sometime after the accident, Mr. Smith’s then-lawyer informed Allstate Insurance Company of the accident and Mr. Smith’s intention to claim accident benefits. Allstate subsequently informed Mr. Smith that there was no such insurance policy in effect. As a result, Mr. Smith filed an OCF-1 with Aviva, the Insurer of the car that collided with him.

The Insurer submits that a reasonable person in Mr. Smith’s situation would not have thought that he or she was operating an insured vehicle at the time of the accident. The Insurer relies on the following: Mr. Smith had a bad driving record that he knew would result in higher premiums and as a result, he registered the motorcycle in his wife’s name as he anticipated difficulties in obtaining insurance; Mr. Smith was knowledgeable about insurance because he had a history of purchasing policies, including for motorcycles; Mr. Smith purchased insurance by cash and barter, through an individual who was also a customer of his (but he did not know the man’s name and had no contact information for him); there was no firm arrangement in place between Mr. Smith and the customer, and all of the arrangements happened by chance; and Mr. Smith never received a copy of the insurance policy. The Insurer asserts that all of this leads to the conclusion that Mr. Smith knew or ought to have known that he was operating the motorcycle while it was not insured. For these reasons, the exclusion in section 31(1)(a)(i) of the Schedule applies and Mr. Smith is prevented from receiving benefits.

Mr. Smith submits that the evidence points to a subjective belief on his part that he did in fact have insurance for the motorcycle. Further, when considering an objective assessment, the Arbitrator noted that he had to take into consideration the distinct culture and way of life of aboriginal people. Mr. Smith submits that the Insurer has: failed to provide any evidence that the payment of goods and services in cash is unusual for aboriginal peoples living on a reserve; failed to account for the cultural and historical differences in record-keeping or to account for the bartering culture of aboriginal life; and the Insurer called no evidence in support of its position that Mr. Smith’s genuine and honest belief was not objectively reasonable.

  1. Was Mr. Smith insured at the time of the accident?

At the beginning of the Hearing, the parties submitted that the Allstate insurance policy not a valid insurance policy, and that Mr. Smith was not insured at the time of the accident. The Arbitrator accepted the submission.

  1. Did Mr. Smith know or ought he reasonably to have known that he was operating the automobile while it was not insured under a motor vehicle liability policy?

The Arbitrator reviewed the law and determined that the Schedule is clear that and insurer is not required to pay an IRB or NEB if the persona who was the driver knew or out reasonably have known that he or she was operating the automobile while it was not insured under a motor vehicle liability policy. The Burden of proof is on the Insurer.

Mr. Smith testified that in 2013, he and his wife were running a smoke shop on the Reserve. In June 2013, he purchased a Harley Davidson motorcycle from a motorcycle shop in Brantford. He had made installment payments on the motorcycle, and ultimately paid $8,800.00 in cash for the bike and a trailer. At that time, he owned three other motor vehicles. All the vehicles were in his wife’s name, and two of them were insured by her; the third was in the process of being rebuilt but never went on the road.

Mr. Smith testified that usually he and his wife used a local insurance broker (“Grand River”) to insure their vehicles. However, Grand River informed Mr. Smith that it did not insure motorcycles. Mr. Smith and his wife were in their smoke shop discussing the insurance of the bike when a customer, having overheard their conversation, told Mr. Smith that he was an insurance broker and could help them with insurance.

The customer, who had frequented their shop approximately twice each month for the previous two to two-and-a-half years, took the bike information from Mr. Smith (make, model and year) and said he would provide Mr. Smith with a quote. In payment for the insurance, they discussed doing a “deal” whereby the customer would be paid with a combination of cigarettes and cash. This occurred in the last week of May 2013, just prior to Mr. Smith completing the purchase of the motorcycle.

Mr. Smith testified that he could no longer remember the customer’s name and that he used a nickname. He had given Mr. Smith his phone number, but the number was lost when Mr. Smith closed his smoke shop. He described the customer as East Indian, with greying hair, well-kept and in good shape. He was in his mid-twenties to mid-thirties, dressed well and drove a nice vehicle, which he described as being a SUV, perhaps a Lexus or BMW.

The customer returned a week later and gave Mr. Smith a quote of $800.00 to $900.00 to insure the motorcycle. They agreed that Mr. Smith would pay for the insurance with a box of cigarettes, which had a retail value of approximately $500.00, and the rest in cash. Mr. Smith testified that he thought he gave the customer $400.00. The customer took down the vehicle VIN number, and Mr. Smith received the pink slip three to four days later. After providing Mr. Smith with the insurance, the customer frequented the smoke shop once or twice more, until it closed. Mr. Smith testified that he thinks the store closed in the autumn of 2013.

Mr. Smith testified that he also asked the customer to speak with his mother, as he thought that he might be able to get a good deal on insurance for her. However, this did not happen as the customer left the store before his mother arrived. Mr. Smith testified that on the Reserve, paying in cash and bartering for services is a way of life. He testified that his house had been built using cash or barter, and that all the vehicles he owned had also been paid for in cash.

On cross-examination, Mr. Smith testified that the customer had neither given him a business card nor a receipt. He described their transaction as a person-to-person deal. He did not make any arrangements to meet the customer again, believing that he would see him within the week, nor did he receive anything from Allstate to confirm the transaction. He agreed that he put the insurance in his wife’s name due to his unenviable driving record, in the hope that it would be a cheaper way of insuring the bike.

Mr. Smith testified that this wife had taken care of any paperwork for insurance purposes in the past. He further testified that in 2012, he was incarcerated and that his wife and mother ran the smoke shop for him during that time. Having said at the Examination Under Oath (“EUO”) that he had closed the smoke shop two to three years earlier (which would make it 2012), he was sure that in fact it was closed in the autumn of 2013. He further testified that the quote for the insurance was in keeping with the amount that he had paid for another bike that he had owned some years earlier.

Mr. Smith’s wife testified that she had been married to Mr. Smith since 2008. She is the mother of five children, two of whom are her and Mr. Smith’s children. She worked together with her husband in the smoke shop. It was her job to take care of the bookkeeping and to account for the money. Her driver’s licence is in good standing. However, she does not have a motorcycle licence. She testified that previously they had purchased motor vehicle insurance from Jevco and Intact insurance companies.

Mr. Smith’s wife’s testimony corroborated her husband. She did remember the man clearly. When she went to obtain licence plates for the motorcycle, she provided the Ministry of Transportation with the ownership and the same pink slip.

Mr. Smith’s wife testified that at some point between 2013 and January 2014, their long-time insurance company cancelled the vehicle insurance for their two cars for non-payment. She further testified that their insurance broker, Grand River, had always been paid by cash and that they would go to the Grand River office to arrange payment. However, a Grand River representative would have come to them had they wished it. It was usual practise for them to barter for goods and services. They did not barter cigarettes with Grand River Brokers because the Brokers also owned the cigarette factory where they bought their cigarettes to sell in their smoke shop.

She did not think anything untoward of her husband’s arrangement with the customer, and when the motor vehicle accident happened, it was the family’s expectation that they would be able to claim for accident benefits through Allstate. However, on being informed of the accident, her primary concern was her husband and her children. Mr. Smith was in the hospital for two weeks and his wife was at the hospital every day. She did not contact the insurance company and left it for their then lawyer to do.

Mr. Smith’s mother testified that she saw the customer who sold Mr. Smith insurance from a distance, but she never spoke to him. She described the customer as dressed in nice clothes, late thirties, black hair and brown skin. She described him as likely East Indian. She further testified that the bike was insured for the 2013 riding season, and then again in April or May 2014. She knew this because in 2014, she had to give Mr. Smith an advance on his salary to pay for the insurance. Mr. Smith’s mother testified that paying in cash was usual and that she thought he had gotten a good deal. She did not think it suspect.


The Insurer urges a finding that Mr. Smith knew or ought to have known that he was operating the motorcycle without insurance. The Insurer relies on the evidence that Mr. Smith had a bad driving record that he knew would result in higher premiums. As a result, he registered the motorcycle in his wife’s name in order to obtain insurance at a better rate.

The Insurer further submits that because Mr. Smith was acutely aware of his unenviable driving record and the potential cost of insurance, he was motivated to seek insurance from any source, the implication being that he either knew that he had not purchased legitimate insurance, or chose not to enquire into whether he had done so, preferring to accept a “deal” without further inquiry. The Insurer relies on the evidence that Mr. Smith did not know the customer’s real name (only a nickname which he could no longer remember); that he had no contact information for him; that there were no firm arrangements in place and all the subsequent contact happened by chance; and Mr. Smith never received a copy of the insurance policy. The Insurer also points to inconsistencies in Mr. Smith’s evidence at the EUO and at the Hearing.

The Arbitrator did not accept this submission, as this submission does not accurately reflect the evidence. Mr. Smith testified that he had a contact phone number for the customer, but it was mislaid when his smoke shop was shut down. Further, he knew him by a nickname, which seems to be an acceptable way of addressing others within Mr. Smith’s community; Mr. Smith is known by a nickname, as is his brother. Indeed, his mother referred to Mr. Smith’s brother only by his nickname during her testimony. Nothing about the use of the customer’s nickname would give Mr. Smith pause. Further, Mr. Smith’s wife’s testimony was that the customer had provided them with his name, but that it was difficult to pronounce, which would lend itself to the use of a nickname.

The Arbitrator was not concerned by the lack of firm arrangements for further meetings. As stated above, Mr. Smith had a contact phone number initially. In addition, the customer was known to frequent the store bi-monthly. The Arbitrator noted that there were two pink slips issued to Mr. Smith; one in 2013 and the other in 2014. The 2013 pink slip was issued after an appropriate process whereby Mr. Smith provided the relevant information to the customer, who returned a few days later with a quote; on receiving the $400.00 deposit, he returned a few days later with the pink slip. This suggests a process that it is reasonable to assume was legitimate.

The Arbitrator also noted the evidence before him that Mr. Smith was stopped on several occasions by police whilst riding his motorcycle, and on at least two occasions, he received tickets for Highway Traffic Act violations. At no time was the validity of his insurance questioned. Furthermore, Mr. Smith’s then-counsel submitted an accident benefit claim to Allstate on Mr. Smith’s behalf, suggesting that Mr. Smith expected accident benefits to be paid under the policy.

The Insurer submits that it is unreasonable for Mr. Smith to believe that an insurance broker would use barter to conduct legitimate business. However, the Arbitrator noted that the transaction must be viewed through the lens of an ordinary rational person in Mr. Smith’s situation. There is no evidence to suggest that the terms of the barter were unreasonable.

he Arbitrator did not accept the Insurer’s submission that the $800.00-$900.00 cost of the policy was below fair market value. There is no evidence before me of this. I also note that Mr. Smith paid for the policy twice—once for the 2013 pink slip, and then again in April 2014 for the second pink slip (for a six-month period) when he had to get an advance on his salary from his mother to complete the transaction. The Insurer describes this as an unusual practise. There is no evidence before me to support this submission. The evidence is to the contrary—barter and cash transactions are usual practises on the Reserve. In addition, it is reasonable to assume that the nature of barter is one devoid of receipt.

The Insurer submits that because Mr. Smith did not receive an insurance policy, this should have given rise to a concern on his behalf. The Arbitrator was mindful that the evidence must be viewed from the perspective of an ordinary rational person in the situation of Mr. Smith; in this regard, the evidence must be seen in the context of life on the Reserve. The evidence establishes that life and business are conducted in a more relaxed and informal fashion than may be acceptable in other settings. Indeed, Mr. Smith points to jurisprudence regarding the historical differences between aboriginal culture and western culture, which cannot be overlooked. Furthermore, Mr. Smith was not asked whether he was concerned by, or what he thought about, not having received an insurance policy, and I am mindful that the burden of proof is on the Insurer.

On this basis the Arbitrator determined that on a balance of probabilities the Insurer has failed to dem

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Motorcycle Accidents, Personal Injury

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