Ontario’s Insurance Payer of Last Resort
Most discussions about personal injuries in auto accidents tend to assume that all of the involved drivers are insured, and their identities are known. But what if somebody is driving without insurance, leaving no insurance company to provide compensation? Or, even worse, what if you are a pedestrian injured in a hit-and-run, or struck by a stolen vehicle, and there is no way to identify the driver?
To handle situations like this, Ontario has a little-talked about safety net – the Motor Vehicle Accident Claims Fund (MVACF). This is Ontario’s payer of last resort, a government insurance program that steps in when there is no other insurance available.
The MVACF was established in 1962 by the Motor Vehicle Accident Claims Act to help those unable to seek compensation from any other source. It wasn’t the first measure the Ontario government had used for this purpose – it was originally a replacement of the Unsatisfied Judgement Fund in the Highway Traffic Act, which served a similar purpose. The Insurance Act lists the MVACF as the last payer of statutory benefits in the order of priority, behind your own automobile insurer, the insurer of the automobile of which you were a passenger, and the insurer of any automobile involved in the accident.
The MVACF provides two primary types of coverage: property damage and personal injury. The fund has a limit of $10,000 to cover property damage, although the limit for third party personal injury coverage is much higher, topping out at $200,000 (minus what has been paid to cover property damage). Access to this fund is heavily restricted, however – as a payer of last resort, it can only be accessed if there is no other insurer available to provide coverage, the recipient must be in Ontario, the accident must have taken place in Ontario, and the recipient must not have been responsible for the accident (the exception being that a non-resident of Ontario can make a claim to the fund if the accident happened in Ontario and the claimant has a similar payer of last resort in their home province).
How one makes a claim to the MVACF depends on the type of coverage required. When it comes to property damage, one can make a direct claim to the fund by filling out some forms, but only if the damage is under $3,000. If the property damage exceeds $3,000, the claim has to be part of a legal action. The circumstances regarding the claim are also limited: it must be a case where the other driver has been identified, and the money cannot be for the repair or replacement of an automobile.
Likewise, if the application is to provide coverage for a personal injury, the claim to the MVACF is part of a personal injury claim. If the other driver is known but uninsured, then the claim is against the driver, with an application to the fund to cover compensation. If the driver is unknown (such as in a hit-and-run), then Ontario’s Superintendent of Financial Services is added as a defendant, bringing the MVACF into the proceedings. The liability requiring the MVACF to pay a judgement also depends on how the claim has played out in court. If the defendant did not file a defence, then once the fund is informed of the default they are liable to pay out the judgement. On the other hand, if the defendant is attempting to settle the lawsuit, the MVACF has to approve the settlement before it will be required to pay funds out for it.
If the MVACF has paid out money on one’s behalf to an injured party, there are consequences. Whenever the identity of the uninsured driver is known, the money that the MVACF has paid out must be repaid in full by the uninsured driver. The driver’s license is also automatically suspended as soon as the money has been paid out, and will not be reinstated until such time as the money has been repaid in full, or monthly repayments of at least 10% of the driver’s gross monthly income have begun. There is some leeway in this – if the driver can demonstrate that the payment would cause undue hardship, or that a smaller settlement would be satisfactory, the amount owing can be reduced. That notwithstanding, if the uninsured driver is unwilling to repay the money that the MVACF has paid out on their behalf, the fund will sue to recover it.
While it may not be very well known – and rarely talked about – the Motor Vehicle Accident Claims Fund is an important safety net, protecting those who are injured in car accidents where there is no recourse to insurance. This means that if you have suffered a personal injury in an accident where the driver was unknown, or uninsured, you are not left facing a recovery without financial support – there is a means to get the compensation you need.