Insurance coverage

The accident happened in 2008. A 20-year old man, driving an SUV in Ottawa, went through a red light and collided with an OC Transpo bus at Heron and Riverside at around 2 o’clock in the morning. The driver, who had a blood-alcohol level nearly three times the legal limit for a fully licensed driver, was killed, along with two of his passengers, both 19 years old. Two other passengers were injured. They had spent the night drinking in a number of pubs, and got into the car with the driver who only had a G2 licence, which disqualified him from driving with any alcohol in his system.

The two surviving passengers sued the pubs in which they had been drinking, the City of Ottawa (who own OC Transpo) and the estate of the dead driver. Last week, a court found the City 20% responsible for the accident and awarded one claimant $2.1 million, and the other $200,000. The reason the City was 20% responsible was because the bus was going 66 kilometres an hour in a 60 kph zone, and the driver had glanced away from the road as he approached the intersection to check his mirrors. The bus driver was a 27-year veteran of OC Transpo.

It may seem farcical that two young people would gain so much from getting into a car with a very drunk friend, who ran a red light and caused the death of himself and two friends, but that is what happens under a policy called Joint and Several Liability, which states that all parties found in any way “responsible” for an accident are liable to claims. If other parties to the case cannot pay, then bodies like the City of Ottawa are required to pay the full amount of the award granted by the courts. In this case, the driver’s insurance payout was reduced from $1 million to $200,000 because he was drunk. The City of Ottawa had to pay $2.3 million altogether because the bus, going through a green light in snowy conditions, was possibly just 6 kilometres over the speed limit.

The Ottawa case is only the latest in a very long list in which municipalities have been included in insurance claims in the belief that they have “deep pockets” and can afford to pay these awards. In one case, involving Peterborough County, an award was given against them of $20 million  and their premiums doubled overnight. The Association of Municipalities of Ontario [AMO] estimated that municipalities in Ontario would pay an increase of $180 million in insurance premiums: that is an increase, not the total amount.

AMO President, Gary McNamara, speaking to the annual conference in Toronto last year, said:

all know that joint and several liability is a major concern for Ontario municipalities. We were told [by Ontario] that it would be fixed – we were working together on it. Then there was an about face and we were told to expect nothing. The problem remains, and grows”. This is a major issue for the province, as other parts of the country have done away with Joint & Several Liability. But the Ontario Government treat it as “an emotional issue”, according to United Counties of Leeds & Grenville Warden, David Gordon.

The province has blinders on. The Minister says: ‘We have to protect the people’, but the province won’t cover the liability. The Eastern Ontario Wardens Conference is involved, AMO is involved, all of us are concerned about the impacts. It is such a serious situation. And it’s coming to a municipality near you.”

The fallacy that municipalities have deep pockets that can cope with these insurance claims has to be faced by the province and the courts, according to the Warden. Municipalities like Merrickville-Wolford simply cannot deal with such a hit on their budgets, but, at the same time, there is almost nothing they can do to guard against claims. As David Gordon says: “We can’t protect ourselves. If an accident occurs on one of the municipal roads, even if those involved are driving through, if its your road, you’re responsible. There are only two municipalities in the United Counties that could survive [the Peterborough] award: North Grenville and Brockville”.

This requires municipalities to provide as much insurance coverage as possible, and as far as their budgets allow. However, it may be impossible to know for sure if coverage is adequate.  “Peterborough thought they had enough insurance, but they didn’t”, explains the Warden. “People may wonder why we have so much insurance. It’s ridiculous. If the judge says ‘It’s $100 million, $200 million’, then that’s what you have to pay. It is the one person sitting on the bench that’s making these decisions. The judges have to wake up and say this is ridiculous.”

It is expected that this year’s AMO conference in August will once again raise the matter with the Minister and Premier.

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