ATV roll-over decision could help insureds who are denied coverage

Recent granting of a plaintiff’s motion for summary judgement against an insurer in an all-terrain vehicle (ATV) overturn accident may make it easier for auto insurance policyholders to access their coverage.

Ultimately, the decision may be of future benefit to policyholders who aren’t perfectly in compliance with the terms of their auto policy, said Tim Crljenica a partner at Thomas Gold Pettingill LLP.

“While there was a breach of the statutory conditions [in the ATV case], the judge felt it would be unfair for [the ATV owner] to be denied the benefit of his $1 million insurance coverage” he said. “This could be a helpful decision for policyholders where insurers have denied coverage.”

The case (Pridmore v. Drenth, 2023 ONSC 817) stems from a Mar. 29, 2014 incident in Dunnville, Ont. Plaintiff Breanne Pridmore was a passenger on a four-wheeled ATV driven by Tyler Drenth and owned by his father, Theodore Drenth.

At the time, Theodore owned two ATVs insured under a standard Ontario automobile policy with Novex Insurance Company, named as a third-party in the lawsuit, which included third-party liability coverage of $1 million.

While the decision text lacks certain specifics about the accident, the fact the ATV flipped over suggests the plaintiff’s injuries were serious, noted .

“The summary judgment was only in relation to whether the Novex policy would be required to indemnify one of the defendants for a judgement in favour of the plaintiff,” he told Canadian Underwriter. “The judge has told Novex that they are going to have to pay up to a million dollars for any vicarious liability found against Theodore.”

Theodore and his spouse, Sandra, were named as insureds on the policy. Tyler was also an insured on the policy when he operated the insured vehicle with Theodore’s consent.

The Drenths’ house is a half-block from rural fields with trails, where the ATVs were ridden. Getting to those fields required brief travel on Central Lane, which is adjacent to the rear of that house. Theodore had given Tyler permission to traverse Central Lane to get to the fields.

Tyler had been asked by a friend to bring an ATV to a nearby field to help pull his friend’s ATV out of the mud. En route, he drove the ATV to Pridmore’s apartment, about one block from the Drenth home, and she joined Tyler on the ATV.

They proceeded down Central Lane to the fields, and then to the field to extract the friend’s ATV from the mud. Next, “they went to the friend’s home for lunch, during which time Tyler consumed a beer or two,” said the Feb. 1 decision by Justice D. L. Edwards.

While driving home, due to a snow squall, Tyler left the trails and travelled along a road shoulder. “While driving along the shoulder of Bird Road, Tyler drove the ATV into a culvert between the shoulder of the road and a farmer’s field. The ATV rolled over, injuring both Breanne and Tyler,” noted the decision. “Tyler possessed a G1 driver’s licence which required a licenced driver to be seated next to him when driving a motor vehicle on Ontario highways.”

Tyler was convicted of two Highway Traffic Act offences: driving the ATV on a highway and for operating a vehicle on a highway without a proper licence.

Novex denied coverage because Theodore allowed Tyler to drive the ATV when he knew or ought to have known Tyler was operating the ATV in breach of a statutory condition on a highway.

While Justice Edwards found Theodore should have known driving the ATV on Central Lane with only a G1 driver’s licence was a breach of a statutory condition, he also accepted that Theodore had consented to Tyler driving the ATV on Central Lane for the sole purpose of accessing nearby trails and returning home. “He did not consent to Tyler driving on the shoulder of any road,” the decision said.

Crljenica noted the judge opted to look at the matter through the lens of Relief from Forfeiture, which can be granted by a court where there is ‘imperfect compliance’ with conditions precedent to insurance coverage.

“Theodore’s breach of the statutory condition was permitting Tyler to drive the ATV on Central Lane to access the trails on the fields and to return home. I have found that this breach does not taint the entire trip,” Justice Edwards wrote. “Theodore’s conduct constituted imperfect compliance with the terms of the policy.”

In granting the plaintiff’s motion for summary judgment, Edwards said, “I declare that the full third-party policy limits available under Novex policy number AA3840420 were available to Theodore Drenth at the time of the incident on March 29, 2014.”

The matter will now proceed to trial in May 2023 unless the parties reach a settlement.

Feature image courtesy of iStock.com/Photoboyko