Do You Need to Provide the Ontario UIM Carrier/Insurer Notice Before Settling with the Underinsured Driver in a Florida Accident?
A common question we get from our Florida attorney colleagues is whether Canadian law requires notice to the Underinsured Motorist (UIM) carrier before settling with the at-fault driver's insurer in Florida. While Florida and many jurisdictions have specific legislation requiring notice to the UIM Carrier before settling with an underinsured tortfeasor, Ontario does not have any such legislation. As such, there is no strict requirement to provide notice to an Ontario UIM carrier before settling with an underinsured motorist. In most cases, however, the implication of settling with the underinsured motorist will result in a release, which would bar any right of subrogation on the part of the UIM insurance carrier.
In the case of Somersall v. Friedman, 2002 SCC 59 the Supreme Court of Canada considered whether a limits agreement with an uninsured tortfeasor, without notice to the UIM Carrier, precluded the plaintiffs from advancing a claim against the UIM carrier. In determining that the right to advance the UIM claim against was not precluded, the Supreme Court of Canada noted that "[t]he respondents have not interfered with the appellant’s rights of subrogation to such an extent as to deprive it of a right it acquired in the contract. Only a clear and unambiguous obligation upon the insured to maintain a claim in tort and not to waive it in exchange for a payment can support an interpretation favourable to the appellant."
In support of its finding, the Supreme Court of Canada also emphasized that,
"it has long been the law, in the absence of contractual terms to the contrary, that the insurer’s right of subrogation will not arise until the insured has been fully indemnified. Here, the appellant’s right of subrogation has not yet arisen, and in any event there is no evidence that the respondents did not honestly and in good faith believe that it was prudent and wise to enter into the limits agreement. Absent any evidence of actual or probable loss, the insurers should not be allowed to raise an alleged breach of subrogation rights in order to bar a claim made in good faith by the insured. Moreover, the plain language of the contract does not support a finding that the limits agreement interfered with a contractual right of the appellant. The only clear obligation on the insured is to “cooperate with the insurer” (except in a pecuniary way) in the pursuit of the action, but this obligation only arises once a payment has been made, and no payment has yet been made here."
Should You Provide Notice to the UIM Carrier before Settling with the Underinsured Tortfeasor?
Although the decision in Somersall v. Friedman provides that an Ontario resident injured by an underinsured motorist can settle without notice to the UIM Carrier, the question is should you provide notice? The short answer is yes. In our practice, we strongly encourage providing at least 30 days notice to the UIM Carrier before signing a release in favor of the underinsured party and their insurer. In the unlikely event that the UIM carrier wants to preserve their right of subrogation, they would simply advance the amount of money being offered by the underinsured party. In such cases, the injured party could still bring the UIM claim and the UIM carrier is free to pursue subrogation should they choose to do so.
We recognize that some Florida attorneys conclude the matter in Florida for policy limits without notice to the Ontario UIM Carrier. In those cases, the injured Ontario driver would still be able to maintain their UIM claim, provided the settlement meets the standards set forth by the Supreme Court of Canada; namely, that it was done in good faith by the insured.
Ontario UIM Claims arising out of Florida Car Accidents Must Be Pursued in Ontario Court
One final point about UIM claims for an Ontario resident arising out of a Florida accident, is that these claims must be commenced in Ontario. Ontario UIM claims are also subject to Ontario law on damages, even though the claim arises out of a Florida or other foreign accident.
If you suspect that you have a Underinsured Motorist Claim arising out of an accident that occurred in the United States, we may be able to assist. Andrew Iacobelli is a licensed attorney in Ontario, Florida and Michigan and has experience with cross border accident claims on behalf of Canadians and Americans. We regularly work with counsel throughout the United States and would be pleased to speak with you about assisting with your cross-border claim. For more information, please contact Andrew Iacobelli at 1-866-234-6093 Ext. 110.