What happens when an “Alberta insurer” sells a policy in Alberta, its insured gets into an accident in Ontario while driving a rental car, and the insured applies for Ontario accident benefits with the rental company’s insurer? We get a priority dispute—and a helpful refresher from the Ontario Superior Court on the territorial scope of Ontario’s Insurance Act.
An Ontario insurer in an Alberta insurer’s clothing
In Zenith v. Chubb[1], the claimant was a resident of Alberta and owned an automobile insured by Zenith in Alberta. She had her car stolen while visiting Ontario. She rented a car (insured by Chubb) and, unfortunately, got into an accident on her way to return it. She claimed accident benefits from Chubb, claiming recourse against the insurer of the vehicle she was in at the time of the accident. Chubb paid her benefits and brought a priority dispute against Zenith, claiming Zenith had priority because the claimant was their named insured.
The arbitrator sided with Chubb, finding that Zenith, as a licensed Ontario insurer, was the higher-priority insurer under s. 268(2) of Ontario’s Insurance Act. The arbitrator held, among other things, that Zenith was bound by the reciprocal scheme under s45 of Ontario’s Act and s33 of Alberta’s Insurance Act.
Appeal judge agrees with arbitrator
Zenith appealed. It argued:
- The arbitrator ignored binding authority, including the Court of Appeal’s decision in Travelers v. CAA.
- Ontario was overstepping by applying its insurance laws to a policy written in Alberta.
- Section 45 of the Insurance Act wasn’t meant to cover this situation.
The appeal judge disagreed. She underscored:
- The accident happened in Ontario. That alone distinguishes this case from (the often misunderstood) decision in Travelers v. CAA, where the accident happened outside Ontario.
- The reciprocal nature of Alberta’s s. 33 and Ontario’s s. 45(1) creates a framework functionally like the PAU (Power of Attorney and Undertaking)
- Section 45(1) of Ontario’s Insurance Act[2] makes clear that where an accident happens in Ontario, insurers licensed in Ontario cannot raise defences under contracts made outside Ontario that would be unavailable under an Ontario-issued policy. Moreover, in these circumstances, the out-of-province contract is deemed to include Ontario accident benefits.
On this last point, the appeal judge made the following observations:
Finally, section 45(1) also says that the statutory benefits in s. 268(1) are deemed to be included in the contract written outside Ontario and this is something that the insurer implicitly agrees to. It would make little sense that an insurer could be obliged to provide Ontario statutory benefits but it was not obliged to participate in a scheme to determine which of a variety of insurers is obliged to pay those benefits. [Emphasis added]
The appeal judge concluded her decision by highlighting some guiding principles emerging from the caselaw:
The outcome of the Arbitrator’s analysis, is a consistent application of the priority rules which takes into account the need to not exceed territorial jurisdiction such that the following principles emerge when all of the cases he considered are taken into account:
- Where an Ontario insurer writes insurance in Ontario, and an accident occurs in Ontario that insurer is subject to the priority rules. This is quite obvious: s. 226(2).
- Where an insurer does not do business in Ontario, but the insurer has signed an undertaking (the PAU), and the insured has an accident in Ontario, that insurer is subject to the priority rules: s. 226.1 and Healy v. Interboro.
- Where the insurer is licensed to sell insurance in Ontario but the accident and/or injury occurs in another province, the mere fact of being licensed in Ontario is insufficient to make the priority provisions in the Ontario Insurance Actapply: Travelers v. Interboro.
- Where an insurer is licensed in Ontario, and that insurer writes a policy outside Ontario but has not signed an undertaking (the PAU), and the insured has an accident in Ontario, that insurer is subject to the priority rules. This is simply a condition of the license that it will appear in an Ontario proceeding and not set up any defence that an Ontario insurer could not raise if the policy had been written in Ontario: s. 45(1)
Key Takeaways
- If you’re licensed in Ontario and your insured is involved in an accident here, Ontario’s priority dispute scheme applies to you. It doesn’t matter that your policy was issued outside Ontario.
- Travelers v. CAA still matters—but only when the accident occurs outside Ontario.
This decision does not alter the law, but it clarifies its application. Out-of-province insurers should understand that they cannot avoid Ontario’s regulatory requirements when their insureds are involved in accidents in Ontario.
See Zenith Insurance Company Ltd. v. Chubb Insurance Company of Canada, 2025 ONSC 2452 (CanLII)
I also encourage you to review Why Foreign Insurers Must Comply with Ontario’s Priority Dispute Scheme
[1] 2025 ONSC 2452
[2] Section 45 (1) of Ontario’s Insurance Act states:
A licence to carry on automobile insurance in Ontario is subject to the following conditions:
- In any action in Ontario against the licensed insurer or its insured arising out of an automobile accident in Ontario, the insurer shall appear and shall not set up any defence to a claim under a contract made outside Ontario, including any defence as to the limit or limits of liability under the contract, that might not be set up if the contract were evidenced by a motor vehicle liability policy issued in Ontario and such contract made outside Ontario shall be deemed to include the statutory accident benefits referred to in subsection 268 (1). [emphasis added]