V802 – An Insurer’s Obligation to Pay Rent
People sometimes need to move out of their existing residences and into new ones following motor vehicle accidents. This may occur due to accessibility issues such as can arise following spinal cord injury. It may also occur when injured people live in remote locations and have difficulty accessing care post-accident. Relocations are sometimes short-term solutions, necessary only in the acute injury period, but they can also be permanent in nature.
Section 16 of the Statutory Accident Benefits Schedule describes that rehabilitation benefits shall pay for reasonable and necessary expenses incurred for the purpose of reducing or eliminating the effects of disability or facilitating reintegration into family, society and the labour market. While costs associated with renting alternative residences are not expressly discussed in the Schedule, claims for such costs can be pursued given the wording of this section.
With a lack of express direction in the legislation, our experience has been that insurers are variable in their response to claims for rent for our clients. Disputes often arise given complete denials of obligation or disagreement over the extent of obligation for rent payment.
Adjudicator Christopher A. Ferguson of the Licence Appeal Tribunal recently heard a dispute as related to this issue. In his decision, 17-002592, Applicant and CUMIS General Insurance, he weighed the competing views of the applicant and the insurer.
The applicant, a catastrophically impaired minor, had lived in a 2-bedroom apartment with her mother and her mother’s fiancé before her accident. As a result of the accident, the applicant and her mother both sustained catastrophic impairment and the fiancé, who had been the one responsible for rent payment pre-accident, was killed.
Following the accident, the applicant required full-time attendant care assistance and the care was provided to her by her father. The applicant, her mother, and her father relocated to a 3-bedroom home. The applicant asked CUMIS to pay the full costs of the rent for the home as well as all of the utilities. CUMIS rejected the request as it preferred to only pay the claim on a rent differential basis; CUMIS agreed to pay the cost of the current 3-bedroom home less the estimated cost of a 3-bedroom apartment. It was unwilling to pay anything toward the cost of utilities. CUMIS’ position was that the applicant’s parents had rent and utility obligations prior to the accident and that to pay full costs post-accident would yield an inappropriate windfall in the claims context.
In what can be considered a fair and reasoned decision, Adjudicator Ferguson confirmed the insurer’s obligation to pay a rent differential as well as a portion of the utilities. He recognized that the applicant’s ordinary, pre-accident housing cost benchmark was that of a 2-bedroom apartment and noted that this portion of the current housing cost was unrelated to the accident and not compensable by CUMIS. Given this, he concluded that CUMIS had obligation to pay the cost of the current 3-bedroom home less the average cost of a 2-bedroom apartment. To calculate the average cost of a 2-bedroom apartment, he directed that the insurer use the lesser of the rates for a 2-bedroom apartment as listed by the Canadian Mortgage and Housing Corporation (CMHC) and the Ministry of Housing Ontario (MHO). With respect to utilities, Adjudicator Ferguson decided it would be simple and fair for CUMIS to pay 50% of the monthly costs.
17-002592, Applicant and CUMIS General Insurance