The Importance of Having Sufficient Insurance Coverage

Question: “I drive a truck and a close friend of mine will borrow my truck sometimes for errands, and then I just use his car. We have different vehicle insurance policies. If I was to get in an accident with his vehicle, could I access my insurance policy if his policy isn’t enough?”

The short answer to this question is yes.

When your friend allows you to operate his vehicle, he is assuming responsibility for you as the driver of his vehicle. Should you get into an accident with his vehicle and you seriously injure another person and the injured person sues you, your friend’s insurance policy will be the first line of defence and provide you with coverage up to the policy limits. Also, if you are sued, your friend’s insurance company will be required to hire a lawyer to defend the case.

However, when your friend’s insurance policy limits appear to not be enough, your own automobile insurance coverage will come into play. The Ontario Insurance Act states that only after the vehicle’s owner’s insurance is exhausted can there be resort to insurance attaching to any other motor vehicle liability policy. In other words, what this means is that if the driver of a car causes an accident and he is not the owner of that car, then the driver’s own automobile insurance policy would not apply until the insurance under the owner’s policy has been exhausted. If the owner of the vehicle has more than one applicable insurance policy covering the vehicle, then this would mean all of that insurance coverage would have to be exhausted before compensation could be sought from any other policy.

It is also noteworthy to mention that most automobile insurance policies in Ontario have “underinsured” automobile coverage. This allows an injured person to sue their own automobile insurance company based on the allegation that the policy limits of the person responsible for the accident are inadequate for providing proper compensation. The maximum insurance that an injured person is entitled to is based on the policy limits he or she purchased, minus the insurance available from the person at fault. For example, if the injured person purchased insurance on his own vehicle in the amount of $1,000,000.00, and the at fault person only had $200,000.00 in insurance policy limits, then the injured person could have access to compensation from his own insurance company for any shortfall. In this scenario, if the injured person suffered damages with a value of $500,000.00 he would be entitled to receive $200,000.00 from the at fault person (policy limits) and the remaining $300,000.00 from his own insurance company pursuant to the underinsured provisions of his own policy. The injured person would need to first exhaust the policy limits of the person who caused the accident before accessing his own policy.

The above truly emphasizes the importance of having sufficient insurance coverage to protect yourself and others. If you or someone you know has been involved in a car accident, a personal injury lawyer is best equipped to advise you of your legal rights and provide you with the steps you need to take.

Nigel Gilby is a Partner at Lerners LLP. He has been recognized by LEXPERT and the Law Society of Upper Canada as a specialist in Civil Litigation. Nigel has been selected by his peers to appear in the “Best Lawyers in Canada” publication since its inception. See his professional biography for more information about Nigel and his work in the area of personal injury law or contact him at 519-672-4510 or by e-mail at ngilby@lerners.ca.

Christopher Dawson is an Associate lawyer at Lerners LLP. See his professional biography for more information about Christopher and his work in the area of personal injury law or contact him at 519-672-4510 or by email at cdawson@lerners.ca.

The content contained in this blog is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice please contact an author.

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