Court Dismisses Claim In Which Broker Issues Policy With Incorrect Model Of Vehicle

In the recent case Routh Chovaz Insurance Brokers Inc. v. Aviva Insurance Company of Canada, 2016 ONSC 2567, the court granted summary judgment to Aviva, dismissing an action brought by an insurance broker.

The case concerned the insurance policy of a Mercedes. In June 2013, Waqar Zaidi requested that his broker, Routh Chovaz, change the coverage he had arranged with Jevco from the 2008 Mercedes Benz CL-320 to the 2010 Mercedes Benz CL-350 he had recently purchased. Routh Chovaz received the request and issued a new motor vehicle liability slip to Mr. Zaidi but did not confirm the change with Jevco.

When the policy was up for renewal in March 2014, Routh Chovaz arranged for coverage with Aviva on behalf of Mr. Zaidi in respect of the 2008 Mercedes Benz, again failing to remedy the coverage to reflect the fact that the vehicle was a different year and model.

In October 2014, Mr. Zaidi rear-ended another vehicle, resulting in damage to the 2010 Mercedes as well as exposure to a personal injury claim by the occupants of the other vehicle.

Aviva took the position that it did not cover the loss and voided the policy, returning the premiums paid to Mr. Zaidi. The Errors and Omissions Insurer of Routh Chovaz paid the property damage claim of Mr. Zaidi and commenced a subrogated claim against Aviva for the property damage amount and also a declaration that Aviva must defend and indemnify for any personal injury damages in accordance with the policy issues in respect of the 2008 Mercedes.

It was accepted by Aviva that it would have insured the vehicle had they been advised of the proper year and model of the vehicle. The additional premium would have been $71.

The issue before the court on this motion for summary judgment was whether Routh Chovaz had a cause of action against Aviva in contract, tort, or declaratory relief.

Contract

The relationship between Routh Chovaz and Aviva was governed by a Brokerage Agreement. The court determined that the Brokerage Agreement provided a complete defence to the claim by Routh Chovaz against Aviva.

Notably, section 10.1 stated "Each Company shall indemnify and hold the Brokerage harmless from and against all costs, expenses, claims, suits, demands or actions (the "Actions") including reasonable legal fees and expenses of investigation and defence incidental thereto, arising as a direct result of its negligent acts or omissions, to the extent that the Brokerage has not caused, contributed or compounded to such...