What Happens When an Unlicensed Driver Is in a Motor Vehicle Collision?
Driving without a license may also have various consequences on a person’s ability to receive full insurance coverage if that person is involved in a motor vehicle collision.
Pursuant to Statutory Condition 4 of the Statutory Conditions – Automobile Insurance, O Reg 777/93, under the Insurance Act, RSO 1990, c I.8, an insured driver has breached Statutory Condition 4 when they drive or operate their automobile while lacking legal authorization to do so (for example, driving without a license). The same is also true for an insured driver who permits another person to drive or operate their automobile while that other person lacks authorization at law.
The Statutory Conditions stipulated in the above regulation are included in and applicable to every automobile insurance policy in Ontario issued in the last thirty years. This means that by breaching Statutory Condition 4 by driving without a license, an unlicensed driver will have consequently contravened their insurance policy, which has consequences under section 233 of the Insurance Act. Specifically, when an insured contravenes a term of the contract, a claim by the insured is deemed “invalid,” and the ability for the insured driver to recover indemnity is “forfeited.”
In other words, if you are involved in a motor vehicle collision without a license, you may be unable to sue for damages or receive indemnity. However, sometimes the case may arise where an unlicensed driver, or the person who permitted the unlicensed driver to operate their motor vehicle, did not realize that the automobile was being driven without being authorized by law via a valid license.
This was the case in Wawanesa v. SC Construction Ltd. (2012), ONSC 353, whereby a small business employer let an employee drive a company van home while the employee was unlicensed. The unlicensed employee typically drove his own car to and from work, but one day his car wasn’t working. His boss let him take the company van home and drive it back the next morning. That evening, the unlicensed employee was involved in a personal injury collision, and a claim was started against him for damages.
In such cases, one may be able to argue that they were acting reasonably in all the circumstances, and as such were not in breach of Statutory Condition 4. Justice Belobaba states at paragraph 9 of Wawanesa v. SC Construction Ltd., that “an insured will not be in breach of Statutory Condition 4(1) if he acts reasonably in all the circumstances.” The question in this case was therefore whether the insured employer acted unreasonably by not first checking for their employee’s driver’s license before lending them the company van.
Justice Belobaba determined that the employer had acted reasonably in the circumstances and was not in breach of Statutory Condition 4. The court noted that the employer truly believed the employee had a valid driver’s license, as the employer had seen the employee drive his own personal vehicle to and from work for nearly 10 years. Furthermore, employees were typically not allowed to drive the company van, so there was no failure by the employer to verify their employee’s driver’s license because there was no need to do so to hire them in the first place.
The insurer had failed to prove that the employer knew or ought to have known, in these circumstances, that their employee was not authorized to drive. As a result, the insurer of the company vehicle had a duty to defend and indemnify the employer with regard to the personal injury action against the employee. As such a tort case could proceed.
If you or someone you know is injured in a motor vehicle collision, you may be entitled to compensation. Please contact our team at JEWELL RADIMISIS JORGE LL.P for a free consultation.
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