01 Aug Why is my own insurance company suing me?

Tim was involved in a car accident after having “a bit too much to drink.” If his insurer can prove it’s more likely than not that alcohol was involved, they can refuse to pay for damages. Here’s how

A. Most people are under the impression that if they get into an auto accident, their car insurance company will cover the cost to repair their own vehicle, as well as repair for any other vehicles involved. And in most cases, this is true.

However, there are exceptions—and one of these exceptions is an accident where alcohol was involved.

It’s fairly well known that drinking and driving carries serious criminal consequences. Yet, I often meet with people who are very surprised when they get a letter from their insurance company indicating that they are also facing a significant bill for the cost to repair the vehicles that were damaged in an accident, including their own if it was leased or financed.

Most of these situations start with the client asking how their insurance company can come after them for these costs despite their having paid all of their insurance premiums.

If you live in the same province as I do, the answer is buried in your Ontario Automobile Policy, which details the obligations and rights of your insurer, and yourself. “Section 7.2.2: Illegal Use” reads as follows (I’ve highlighted a couple key points in bold type):

We won’t pay for loss or damage caused in an incident:
• if you are unable to maintain proper control of the automobile because you are driving or operating the automobile while under the influence of intoxicating substances;

• if you are convicted of one of the following offences under the Criminal Code of Canada relating to the operation, care or control of the automobile, or committed by means of an automobile, or any similar offence under any law in Canada or the United States:

• causing bodily harm by criminal negligence
• dangerous operation of motor vehicles
• failure to stop at the scene of an accident o operation of an automobile while the concentration of alcohol or drug in the operator’s blood exceeds the limit permitted by law
• refusal to comply with a lawful demand to provide a breath sample, perform physical coordination tests or submit to an evaluation o causing bodily harm during operation of a vehicle while impaired by alcohol or a drug or a combination of alcohol and a drug or while the concentration of alcohol or drug in the operator’s blood exceeds the limit permitted by law, or
• operating a motor vehicle while disqualified from doing so;

• if you use or permit the automobile to be used in a race or speed test, or for illegal activity;

• if you drive the automobile while not authorized by law; and

• if another person, with your permission, drives or operates the automobile under any of these conditions.

This looks like a lot—but to put it simply, if you are convicted of one of the Criminal Code offences, there isn’t much that can be done. If you were not convicted, then it’s a question of whether you were “unable to maintain proper control of the automobile because you were driving or operating the automobile while under the influence of intoxicating substances.”

This catchall provision is intentionally broad to leave the door open to point to alcohol even where other factors contributed to the accident as well. It’s also important to understand that it is up to your insurance company to prove this on the balance of probabilities. Balance of probabilities means it’s more likely than not that alcohol was involved.

So, what does a court look at? The cases on this issue are clear that simply consuming alcohol before getting into an auto accident does not automatically establish that you were unable to maintain control because you were driving while under the influence. However, the amount of alcohol that was consumed is a factor and it won’t be difficult for your insurance company to convince a judge that this meets the balance of probability requirement if a significant amount of alcohol was consumed prior to the accident. While there is no magic number as to how much alcohol will be enough to prove that you were unable to maintain control because of alcohol consumption, this is the conclusion in most cases where significant amounts of alcohol were consumed, regardless of the other facts.

Cases in which the insurance company was not successful in proving this provision applies tend to involve cases where it is not established that the driver consumed significant amounts of alcohol, and there is also some other explanation for why the accident happened. For instance, was the driver unable to maintain control of the vehicle because an animal jumped out in front of him, the roads were icy or he was distracted by something?

Note that I’ve referenced alcohol use in this article because it’s the most common reason the insurance company may sue you, but the application of Section 7.2.2 would also apply to marijuana or other drugs.