Fridays with Rogers Partners
At our weekly meeting, Kate Ferguson discussed the recent decision from the Ontario Superior Court of Justice in Aviva Insurance Company of Canada v. Cahill, Litigation Administrator of the Estate of Paul Manzon, 2026 ONSC 4975.
Facts
This application was commenced by Aviva to determine if it had an obligation to defend and indemnify its insured, Mr. Paul Manzon, in four actions that all arose from a very serious motor vehicle collision which was the result of Mr. Manzons dangerous driving.
At the time of the Accident Mr. Manzon had a $2,000,000 auto liability policy with Aviva. Mr. Manzon indicated on his application for insurance in 2016 that the vehicle had not been modified. This was true at the time, however substantial modifications were made to the vehicle after Aviva renewed the policy in 2017. These modifications were not reported to Aviva.
Aviva argued that the modifications to the vehicle substantially changed the risk. It submitted that it would not have insured the vehicle had the modifications been disclosed.
Issues
The Court considered whether the vehicle modifications amounted to a material change in risk, whether Aviva had to prove that those modifications caused or contributed to the accident, and whether Mr. Manzon was legally required to disclose them.
Conclusion
Ultimately the Court, relying on Johnson v. British Canadian Insurance Co, found that Materiality is determined from the perspective of the insurer.[1] The question is whether the change would reasonably affect the minds of a prudent insurer when deciding whether to provide coverage, or when deciding what premium to charge. It was held that the causal connection between the modifications and the accident were not relevant to the materiality analysis as materiality is assessed at the time the policy is formed and not focused on post-loss causation.
Furthermore, an insured’s duty to disclose is not dependent on the insured’s own understanding of materiality or risk. What matters is that Mr. Manzon knew the vehicle had been modified. He may not have appreciated precisely how those modifications would affect Aviva’s underwriting decision. However, because the original application specifically asked about vehicle modifications, the Court found that he was aware of their relevance. Accordingly, once he knew of facts that made the risk materially different from the risk Aviva had agreed to insure, he was obligated to report them.
[1] Johnson v. The British Canadian Ins. Co., 1932 CanLII 64 (SCC), [1932] SCR 680