December 16, 2014

SABS Update: The New Definition of “Incurred” Applies to Old Contracts of Insurance? We Don’t Think So

Zaya v State Farm Mutual Automobile Insurance Company, FSCO A12-005753, Adjudicator Deborah Pressman

MVC October 7, 2010. The Applicant was injured in a motor vehicle collision one month after the September 2010 amendments but under a policy taken out before the amendments. Both parties agreed that Ms. Zaya’s automobile policy qualified as a “transitional policy” under the New Schedule, and as a result, she was able to claim caregiver and housekeeping benefits. These benefits were no longer available to non-catastrophic claimants under the New Schedule.

The issue was whether or not Ms. Zaya’s claims for caregiver and housekeeping benefits must meet the new incurred expense requirement in section 3(7)(e) of the New Schedule.

Under the Statutory Accident Benefits Schedule (Accidents on or after November 1, 1996) (“Old Schedule”), a benefit was “incurred” even if there was merely a promise to pay and the insured had not actually paid for the services.  The New Schedule requires that the person providing the benefit did so in the course of his or her regular occupation or profession, or sustained an economic loss.

The Arbitrator held that the New Schedule is not simply applicable to accidents on or after September 1, 2010, but it is “effective” September 1, 2010; it deals with policies existing at the time it came into effect under sections 2 and 68 of the New Schedule. The Arbitrator found the language in section 2(1) clear, in that if a motor vehicle accident occurs on or after September 1, 2010, then the benefits provided are subject to the New Schedule, with the only exception outlined in the transitional provisions of section 68.

Section 68 is relevant, as Ms. Zaya claimed caregiver and housekeeping benefits. Section 68 states that optional caregiver, housekeeping and home maintenance benefits referred to in paragraph 2 of subsection 28(1) are deemed to be included in the motor vehicle liability policy and applicable to an insured person in respect to the motor vehicle liability policy. Subsection 28(1) allows for optional caregiver and housekeeping benefits to remain available to non-catastrophic claimants in the circumstances described in section 13 (caregiver) and 23 (housekeeping) of the New Schedule.

The Arbitrator’s view is that the legislature’s reference to section 13 and 23 in its optional benefits provision is determinative of its intent that the New Schedule applied to all accidents occurring on or after September 1, 2010, including the new definition of “incurred”. Therefore, Ms. Zaya could still claim caregiver and housekeeping benefits, but the benefits were subject to the requirements of section 13 and 23. This included the new definition of “incurred”.


The new definition of “incurred” has been widely criticized for being too strict, and leaving many claimants without access to caregiver and housekeeping benefits. This decision demonstrates the willingness of at least one Arbitrator to take it another step further. By interpreting the legislation so that the definition applies to certain transitional policies as well, claimants may be faced with yet another hurdle to access their accident benefits.
This interpretation is suspect. Notionally, the contract purchased by the insured is the contract the insurer priced and sold; it is, after all, a contract. Without a specific abrogation of the agreement arrived at by the parties at the time of contracting, this particular ruling is, in our view, likely wrong.
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