MTO Launches Uninsured Vehicle Project

November 12, 2010

 McGuinty Government Improving Road Safety

Starting November 29, a new system will help keep uninsured drivers off Ontario’s roads by providing on-the-spot confirmation of insurance when drivers go to renew their licence plate.

In Ontario, it is mandatory for all vehicles to have valid insurance coverage. Currently, drivers are required to provide proof of insurance when renewing their vehicle’s licence plates. The new electronic verification system, will allow the province to confirm directly with the Insurance Bureau of Canada if a vehicle has mandatory insurance coverage during the license plate renewal process.

Partnering with the Insurance Bureau of Canada to check for valid insurance in real-time will make sure that drivers have insurance that is valid and up-to-date. It will also help keep Ontario’s roads safe by ensuring there are fewer uninsured vehicles on the road and less risk to other drivers.

For more information visit the Minitry of Transportation Ontario website or the Insurance Bureau of Canada website.

Ryan Mitchell, CAIB, CPIB
Vice President Commercial Lines
T: (416)862-1750

Commercial General Liability Insurance – Coverage for Any Business

November 8, 2010


As one of the most common types of liability insurance policies purchased in Canada the Commercial General Liability Insurance policy is an important piece of the insurance buying process.  The Commercial General Liability policy referred to as CGL for short is intended to defend and indemnify a business facing a claim by a third-party alleging property damage or bodily injury resulting from an “occurrence.”  Other additional coverages can include Personal Injury and Advertising Injury, Tenants Legal Liability and Medical Payments coverage.

The CGL policy in Canada is not uniform across all insurance companies as each insurer has their own wording.  While there are some significant differences among the wordings most of the essential terms and conditions are very similar, if not identical. 

Commercial General Liability Insurance policies are written on an “occurrence” based form which means that the event or occurrence that is the subject of the loss must have occurred during the policy period.  In order to trigger coverage under the property damage and bodily injury section of the policy either property damage or a bodily injury must have occurred during the policy period caused by an occurrence (includes insureds negligence) which takes place in the coverage territory and for which the insured is legally obligated to pay compensatory damages. 

The CGL policy includes a “per occurrence” limit as well as an “aggregate” limit.  Per occurrence refers to the most the policy will pay for any one occurrence/incident.  Aggregate refers to the total amount that the policy will pay out during the policy period or term.  Most policies are written for a 12 month period.  For example, if a company has a $1,000,000 per occurrence limit and $2,000,000 aggregate limit and is successfully sued for $1,500,000, the insurer will only pay $1,000,000 because the claim is $500,000 more than the per occurrence limit on the policy.  This then reduces the aggregate limit from $2,000,000 down to $1,000,000 for the remainder of the policy period.  The Commercial General Liability Insurance policy is not intended to provide coverage for claims arising from the rendering or failure to render professional services.  The difference between the CGL policy and the Professional Liability policy is often misunderstood.  In order to provide coverage for the professional services that a business provides a Professional Liability or Errors & Omissions Liability policy needs to be purchased.

In today’s litigious business environment where even small incidents can result in large lawsuits the Commercial General Liability policy is a very important component of the overall insurance buying process. 

This article provides an overview of some of the key issues in relation to the Commercial General Liability Insurance policy although it is not intended to be a comprehensive analysis of this type of coverage.  As mentioned in the article, the coverage can vary from policy to policy and as a result the policy wording should be reviewed carefully by a registered insurance broker to ensure that it meets the requirements of the insured business. 

 For more information please contact Ryan Mitchell at 416-862-5620 or

Directors’ and Officers’ Insurance – Entity Coverage and the Blogosphere

November 2, 2010


Recently, while perusing the Canadian D&O Blogosphere, I came across the website of an Ontario insurance broker, who pointed out that “not all D&O policies provide Entity Coverage” and that that coverage is “critical to your insurance program.” It ends with “if your broker can’t do this… find one that will.”

I appreciate every attempt to understand and communicate the technical minefield of D&O risk and loss control, but this proves that the really important issues cannot be provided on a website. I decided not to provide a public reply on their blog, but since education on the subject of Directors’ and Officers’ liability is insufficient (by insurance brokers, or available to insurance buyers) I decided to send him the response I was going to put on his blog, and post this same response to you.

Dear blogger, I think this blog has the potential to do more harm than good. The D&O policy was always intended to cover the personal liability of directors and officers, because a relatively small loss could be catastrophic to an individual person, but even a much larger loss might not be catastrophic to their corporation.

The insurance brokerage industry has done a very poor job of explaining D&O coverage in general, and many Insured Persons have been put at great risk by purchasing D&O policies that have too many extensions to the corporate entity. Following your example, it may be great to have entity coverage when there is a $10 million total loss on a $25 million policy, but it is catastrophic to the individual Directors and Officers if that $10 million total loss is made against a $5 million policy. In this second example, many brokers will point to ‘coverage enhancements’ (I use this term very carefully) to protect against ‘limit exhaustion’, like ‘Priority of Payments’ or ‘Built-in Additional Excess Side A’, but these could be window-dressing hiding a bigger problem. I know of no Canadian precedent surrounding the actual trigger of Priority of Payments, but many versions of that wording might actually create more financial risk for certain Insured Persons. And regarding Built-in Additional Excess Side A (Side A is the Insuring Agreement that responds when the Corporate Entity is not legally or financially able to indemnify the individual Insured Persons), this small additional limit is shared by many individuals, and is not adequate protection when you consider that it will likely be the only insurance available for the remainder of that particular claim and for every future claim that is in any way related to the same underlying circumstances. The other problem with Built-in Additional Excess Side A is that it doesn’t include protection from failure of the Insurer, or provide Difference in Conditions (DIC – fewer exclusions) features.

 There may be many examples of the Corporate Entity being uninsured by the D&O policy, but there are also many examples of D&O policies being fully exhausted on defences costs alone, long before the exposures to individual Directors and Officers have stopped (it has been suggested that that the vivendityclassaction (try it with dot com) defence costs will fully exhaust their $200 million policy limit.)

 I am not suggesting that Entity Coverage should not be available in the D&O policy, but all forms of Entity Coverage should be fully explained to the client, and they should know the degree to which they are sharing their limit of liability (perhaps the only limit of liability available to any and all claims that could arise from their tenure as a Director or Officer) and therefore increasing the possibility of ‘limit exhaustion.’ My second warning is that it is very difficult to identify all areas of ‘limit sharing’ in a modern D&O policy. This form of ‘Insurance Risk’ is not isolated to the Insuring Agreements, it can be found within any section of the policy, every endorsement and even in the applications. This analysis has to include definitions, allocation, severability, exclusions and insuring agreements.

Any broker can help you buy a broad D&O policy, but that does not make it a good policy. They first need to understand your industry, your company, and your priorities, long before they present a D&O policy.

 If your broker isn’t doing this, find someone who can and will.

If you would like an explanation of this post with specific reference to your company, or if you have questions about D&O risks, insurance coverage, limits adequacy, program structure, risk management or loss control, please call me directly.

Greg Shields, Partner, Mitchell Sandham Insurance Brokers, 416 862-5626,

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