Insurer's termination notice was defective and therefore no effect.

July 23, 2016, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Date of Decision: June 6, 2016

Heard Before: Adjudicator Charles Matheson


Preliminary Issues Hearing


Mr. Michael Doran was injured in a car accident on April 12, 2011. As a result of the April 12, 2011 accident, Mr. Doran suffered extensive injuries including a catastrophic brain injury. This injury has affected his long term and short term memory, among other things. He applied for and received statutory accident benefits from RBC payable under the Schedule, but when the parties were unable to resolve their disputes through mediation, Mr. Doran applied for arbitration at the FSCO.


The issue:


  1. Is Mr. Doran excluded from receiving non-earner benefits, housekeeping and home maintenance benefits and visitor expenses by virtue of section 31(1)(a) of the Schedule?




  1. Mr. Doran is not excluded from receiving non-earner benefits, housekeeping and home maintenance benefits and visitor expenses by virtue of section 31(1)(a) of the Schedule.


Mr. Doran had his first car insurance policy under his mother’s policy which was effective October 29, 2009 (“First Policy”). RBC cancelled the first policy effective November 4, 2010. During this time frame, Mr. Doran was a student at Wilfrid Laurier University. On January 17, 2011, Mr. Doran’s mother contacted RBC to arrange for another car insurance policy for Mr. Doran that was not attached to her own insurance policy, this policy (“Second Policy”) took effect January 18, 2011.


The parties agree that the onus of proof of this preliminary issue rests with RBC. There was undisputed evidence presented during this Preliminary Issue Hearing. The undisputed evidence shows there were many issues with policies including: a long series of single missed payments for this First Policy due to NSF and stop payments, RBC cancelled the first policy for missing payments, contact information was not updated from the first to second policies, withdrawals for the second policy had also been NSF, stop payments were issued on the second policy as well, registered letters were sent warning of cancellation and then termination to wrong addresses,


Contested evidence included calls from Mr. Doran and his mother regarding the status of the policy, Mrs. Doran proceeded to renegotiate a repayment schedule to satisfy RBC and keep the policy valid and on-going, Mrs. Doran testified that she was waiting for RBC’s response to her proposal and simply called RBC back by coincidence the day prior to the cancellation of the Second Policy, as she had not received any correspondence for same, attempts by the Dorans to renegotiate payment dates,  Mrs. Doran suggests she was still under the impression that the policy was still valid, as she had not received a single notice otherwise from the RBC.


Contested evidence from RBC included the informing of the Durans their policy had been cancelled over the phone, and the status of letters sent to the household. RBC takes the position that the Second Policy was properly cancelled as this termination was in full compliance with the statutory conditions and regulations.


RBC argues that section 3 of Regulation 777/93 permits Insurers to terminate a policy of insurance “inter alia” non-payment of the whole or part of the premium due under the contract pursuant to section 11 of the Regulation, and that its internal policies are irrelevant, as long as they do not violate the regulations. RBC argues that it cannot be bound by its internal policies, which are admittedly not explicitly defined anywhere nor announced to its clients as part of the contractual terms or objective.


Mr. Doran’s position is the cancellation notice was defective for a number of reasons, and therefore void “ab initio” and of no force or effect on the date of the car accident. The reasons are:


  1. The cancellation letter failed to provide 3 payment options, as the letter specifically excluded the cash payment option of a specified amount

  2. The cancellation letter failed to provide that the payment could be delivered to a specified RBC insurance location, in cash, but only provided for payment to be mailed to a post office box;

  3. RBC failed to provide sufficient evidence to show when the registered cancellation letter was mailed and that a 30 day notice period was provided;

  4. This cancellation letter did not provide instructions in a straightforward and clear language directed to an unsophisticated person.


Mr. Doran also argued that RBC incorrectly attempted to withdraw a premium payment on February 3, 2011, after the deduction date for the Second Policy was changed to the 22nd day of the month. Further, RBC failed to give any evidence that Mr. Doran or Mrs. Doran knew about the internal policies that triggered multiple withdrawal attempts prior to the first payment date of 22 February 2011, thus resulting in the cancellation of the policy and the defective cancellation letter dated February 12, 2011. Mr. Doran argues that he was under the impression that the second payment should have been on March 22, 2011. If that payment had been missed, then the resulting cancellation would have been well after the subject car accident. Finally, Mr. Doran argues that RBC failed to meet its onus of presenting evidence that showed that Mr. Doran knew or ought to have known that he was operating his car while it was not insured.


The Arbitrator reviewed the evidence and the law.  He determined that Mr. Doran’s argument that the letter is defective is correct in that the letter terminating his second policy by RBC does not allow for the cash payment of the debt, as stipulated in Regulation 777/93, section 11(1.3). This is a fatal error on the part of RBC, in light of the finding of the Supreme Court of where the court found that this particular legislation is consumer protectionist in nature.


When reviewing the evidence of the First Policy, Mr. Doran was financially irresponsible. However, the experience he received during his First Policy did demonstrate that he knew that two missed payments resulted in a cancellation of his policy and could only serve to form the opinion of this Insured or unsophisticated person. It was very unclear as to why RBC treated the Second Policy the same as an on-going policy and did not explain to Mr. Doran or his mother that the payments were going to be forthcoming in rapid succession, and not withdrawn on the 22nd of each month. It was also unclear by the evidence that RBC explained that January 22, 2011 was the first date a payment was required not February 22, 2011, with a two week adjustment to the premium payment for that month. There was no evidence that RBC attempted to update Mr. Doran’s contact information at the time of renewal of the Second Policy. RBC failed to give any evidence that Mr. Doran knew any of the actions of RBC during the timeframe of January 2011 and March 2011.


The Arbitrator took the view that it is clear that RBC  had to give notice of cancellation of the policy or the pending notice of cancellation of the policy in extremely clear language that an unsophisticated party can understand. This is the element which is solely in the control of RBC. While reviewing the defectiveness of the cancellation letter it is clear to the Arbitrator that the regulations require a cash component to the payment scheme alternative for a possible cancellation of an insurance policy. It is because the consequences of a cancellation can be so severe, all components of Regulation 777/93 section 11(1.3)(b) must be adhered to in the strictest terms.


Therefore the Arbitrator found and ordered Mr. Doran is not excluded from receiving non-earner benefits, housekeeping and home maintenance benefits and visitor expenses.

Posted under Accident Benefit News, Automobile Accident Benefits, Brain Injury, Car Accidents, Catastrophic Injury, Chronic Pain, Fractures, Pain and Suffering

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Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.

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