Published In: Insurance Law Newsletter – 12.May.20 May 12, 2020

Case Summary: What not to do when terminating a policy

An insurer cancelling a policy must strictly comply with the statutory conditions.

Insurance law – Automobile insurance – Statutory obligations – Cancellation of policy, time cancellation in effect – Arbitration – Practice – Appeals – Standard of review

Allstate Insurance Co. v. Ontario (Minister of Finance), [2020] O.J. No. 726, 2020 ONSC 830, Ontario Superior Court of Justice, February 6, 2020, B. Davies J.

The insurer cancelled the insured’s automobile policy in April 2013 because of unpaid premiums. In March 2014, the insured paid the outstanding amount and applied for a new policy, which was issued effective March 22, 2014. Shortly thereafter, the insured again failed to pay the premiums. The insurer advised the insured by letter it would cancel the policy on June 14, 2014, if the outstanding amounts were not paid. The insurer’s letter was returned, marked “moved/unknown.”

In October 2014, the insured suffered catastrophic injuries in a motor vehicle accident that rendered him quadriplegic. The insurer refused coverage on the basis that it had cancelled the policy. The insured took the position that the cancellation was defective and he was entitled to coverage. The matter proceeded to arbitration, where the arbitrator found that the policy was not properly cancelled. The insurer’s letter failed to include an address where the insured could have paid the outstanding premiums to avoid the cancellation, and the letter was not sent to his last known address.

On appeal, the court found the arbitrator was correct in concluding that an insurer seeking to rely on a unilateral cancellation of a policy mid-term must demonstrate they complied with the statutory conditions, including the provision of an address where the payment could be delivered to avoid termination. Having found that the notice of termination was not valid, the court declined to address the second issue.

This case was digested by Jaeda B. Lee, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Jaeda B. Lee at