An Ontario appeals court just made it harder for insurers to dodge coverage when co-owners disagree about who can drive their shared vehicle.
The November 10 ruling centres on a straightforward question with expensive implications: If two people own a car together and only one of them says yes to lending it out, are both owners on the hook when something goes wrong?
The answer, according to the Court of Appeal for Ontario, is yes. And that means their insurers are too.
Sarah Nowakowski was injured in a crash involving a Dodge pickup. The truck was registered to both Allison Malcolm and Shawn Le Brun, but only Malcolm had taken out an insurance policy on it with Economical Insurance. Le Brun was not listed anywhere on that policy.
The driver involved in the accident was Katrina Campbell, who also was not on Malcolm's policy. Malcolm and Campbell had never had any discussions about whether Campbell could operate the vehicle. But Le Brun may have consented to Campbell possessing and operating the truck, though whether that actually happened remains a disputed issue of fact.
When Nowakowski sued, the question became which insurance policy should respond. Her own insurer, Allstate, and Malcolm's insurer, Economical, disagreed about coverage.
Economical argued that Malcolm needed to personally consent before the company would be responsible. The insurer said co-owners should be treated as separate people with separate responsibilities. Since Malcolm never gave Campbell permission, Economical reasoned, Malcolm was not liable and the policy should not respond.
Ontario's Highway Traffic Act says an owner is liable for damage caused by negligence in operating their vehicle unless that vehicle was in possession of someone other than the owner without the owner's consent. Economical insisted this meant each individual owner's consent must be assessed independently.
The court disagreed. Under Ontario law, when a statute uses the singular it also means the plural. So the owner means the owners when more than one person is registered. If either co-owner consents, both are liable.
The court relied on its 2005 decision in Mazur, which said it is unnecessary for one owner to have the consent of the other owner before liability will attach to both. The court also pointed to its 2015 decision in Fernandes that described the expansive interpretation of owner liability as an integral element of the Highway Traffic Act's mandatory licensing and insurance scheme to ensure public safety.
That approach makes an owner liable even when someone the owner trusted with the car hands it off to a third person, even if the owner expressly prohibited that third person from operating the vehicle. The consent of the person the owner trusted gets attributed back to the owner.
Economical tried to rely on a 1960 case called Barham, which had held that a non-consenting co-owner was not liable. But the appeals court said Barham has been overtaken by the court's subsequent jurisprudence and sits uncomfortably with later decisions.
The court also clarified that section 239 of the Insurance Act does not establish a vehicle owner's liability. It merely requires that any liability legally imposed on an owner be covered by the owner's motor vehicle insurance policy. The lower court judge had erred in holding that an owner's liability could be founded on section 239, the appeals court said, but the error made no difference to the outcome.
Since both Malcolm and Le Brun are liable under the Highway Traffic Act if Le Brun consented to Campbell's possession of the vehicle, section 239 of the Insurance Act requires that liability be covered by Malcolm's Economical policy.
The decision has immediate implications for how insurers handle claims on jointly owned vehicles. Consent from any registered owner now engages the liability of all registered owners, which in turn triggers coverage under their policies.
For adjusters reviewing files, that means one co-owner's permission is enough. For underwriters pricing policies on shared vehicles, the exposure considerations have changed. And for insurers trying to limit coverage by arguing a policyholder did not personally authorize use, that argument no longer works in Ontario.
The ruling makes clear that when it comes to shared ownership, insurance follows the vehicle and all its owners together.
