Automobile insurance policies can provide drivers with the comfort of knowing that should something happen to them while driving they will enjoy some protection should they become injured or injure someone else. But not all actions behind the wheel are covered by insurance policies. In a recent decision, a driver of a car was told by his insurer that his coverage was void because he was engaged in “racing” or a “speed test” which disqualified him from coverage.

Speeds of close to 200km lead to deadly accident

In the early morning hours of October 11, 2015, the defendant was driving south on a highway. He was heading home after visiting with a friend. While driving, he reached a speed of between 198-215 km per hour. Another vehicle pulled in front of him, and he hit the rear passenger side of the other vehicle. One of the four people in the other vehicle died and three others were injured.

The defendant’s insurer requested summary judgment dismissing their obligation to insure him because he was engaging in racing or a speed test.

Statutory prohibition can lead to loss of coverage

The insurer’s position is that the defendant’s driving at such high speeds meant that he was engaging in a “race” or a “speed test.” Ontario’s Insurance Act includes regulations that cover statutory conditions. In this case, section 4.(2) of the Act states “The insured shall not use or permit the use of the automobile in a race or speed test or for any illicit or prohibited trade or transportation.” It should be noted that Alberta’s Insurance Act provides similar conditions.

Was the defendant engaged in a race or speed test?

The defendant stated that he was not racing that night, but instead was eager to get home because it was so late. The court noted that at the time of the accident, the defendant was not following another car, nor was another car following him.

The insurer argued that there was no reasonable explanation for his excessive speed on that night. He was not impaired, nor was there a suggestion that his vehicle had malfunctioned. He also had no reason to be home by a particular time. While the Insurance Act does not define “race” or “contest” the province’s Highway Traffic Act does contain a definition, which the court quoted as stating “driving a motor vehicle at a rate of speed that is a marked departure from the lawful rate of speed.”

However, the court found that the definition in the HTA does not “reflect judicial interpretations of ‘race’ or ‘speed test’ in the insurance context. The court explained that the definition provided by the insurer would mean anyone driving at excessive speed would be barred from coverage.

The court concluded that excessive speed alone is not sufficient to constitute a race or speed test.  The court stated that insurance policy language should be read strictly, meaning that in this case, the act of driving very fast, while a violation of the HTA, is not behavior that limits the insured’s insurance coverage.

As a result, the defendant’s insurer was ordered to provide coverage.

At HMC Lawyers our Insurance Team has decades of collective experience and a deep, thorough understanding of potential risks as well as legal issues that commonly arise.  We understand the importance of risk management, especially when it comes to questions of insurance coverage, and strive to provide our clients with certainty by helping them identify and avoid potential problems wherever possible. To discuss an insurance coverage matter or related dispute, call 1-800-480-3534 or contact us online.