Zondervan v Definity Insurance LAT: Train Incident Ruled SABS Accident

• The Ontario Licence Appeal Tribunal (LAT) ruled against Definity Insurance Company for its ongoing, unjustified denial of accident benefits to a severely injured minor.
• Definity initially denied the claim, arguing a train was not an 'automobile' under SABS, but conditionally approved benefits if incurred and its appeal failed.
• A preliminary LAT decision on October 6, 2025, confirmed the incident was an 'accident,' yet Definity continued its refusal, appealing to Divisional Court without a stay.
• The LAT awarded the applicant 10% of the claimed benefits, explicitly stating this was a deterrent against Definity's 'imprudent' conduct and to discourage other insurers.
• The Tribunal found Definity's conditional approval amounted to an ongoing denial, leaving the applicant vulnerable and confirming the benefits were reasonable and necessary.

The LAT explicitly stated that this award was intended to discourage Definity from continuing its unjustified refusal to pay benefits and to deter other insurers from engaging in similar conduct in the future.

A significant ruling from the Ontario Licence Appeal Tribunal (LAT) has shed light on insurer conduct following a severe accident involving a minor. On March 8, 2023, a then-16-year-old applicant was struck and pinned by an ION light rail train while attempting to cross a street in the Waterloo region. The incident resulted in extensive injuries, including hip, leg, and rib fractures, loss of consciousness, and necessitated intubation, numerous surgeries, and a prolonged hospital stay.

Following the accident, the applicant sought benefits from Definity Insurance Company under the Statutory Accident Benefits Schedule (SABS), specifically the version effective September 1, 2021, which includes amendments from June 1, 2016. Definity, however, initially denied the claim, asserting that the incident did not qualify as an "accident" under the SABS definition, arguing that a train is not an automobile. Despite this denial, the insurer conditionally agreed to pay benefits, but only if they were incurred and if its subsequent appeal against any ruling failed. This approach effectively left the applicant in a precarious position, uncertain about accessing crucial support.

The matter proceeded to the Ontario Licence Appeal Tribunal, which issued a preliminary decision on October 6, 2025. In this initial ruling, the LAT unequivocally determined that the incident did indeed constitute an "accident" as defined by the SABS, directly contradicting Definity's primary argument. Despite this clear directive, Definity Insurance Company requested a reconsideration of the preliminary decision, a request that the Tribunal promptly rejected as premature.

Undeterred, Definity escalated the matter further. On October 28, 2025, without seeking a judicial review or a stay of the LAT's preliminary finding, the insurer filed an appeal against the decision before the Divisional Court. The Tribunal later characterized Definity's ongoing refusal to pay benefits after its preliminary ruling as "imprudent, stubborn, inflexible, unyielding, or immoderate," highlighting a pattern of conduct that lacked a reasonable basis.

In its final determination in *Zondervan v Definity Insurance Company*, cited as 2026 CanLII 97276 (ON LAT), the Licence Appeal Tribunal found the applicant entitled to the claimed benefits. The LAT concluded that a detailed analysis of whether the benefits were reasonable and necessary was superfluous, given that Definity's own conditional approval had already confirmed their necessity due to the accident. This conditional approval, in the Tribunal's view, implicitly acknowledged the validity of the benefits.

Crucially, the Tribunal capped the award against Definity at 10 percent of the benefits claimed. This specific percentage was chosen to strike a balance between the applicant's entitlement and need for benefits and the insurer's right to appeal. The LAT explicitly stated that this award was intended to discourage Definity from continuing its unjustified refusal to pay benefits and to deter other insurers from engaging in similar conduct in the future. The Tribunal underscored that Definity's conditional approval strategy effectively amounted to an ongoing denial, leaving the injured applicant vulnerable and without guaranteed access to incurred benefits.

This decision from the Ontario Licence Appeal Tribunal establishes a significant precedent regarding insurer accountability, particularly in cases involving ongoing denial of accident benefits in Ontario. The ruling in *Zondervan v Definity Insurance LAT* sends a clear message that insurers cannot indefinitely withhold benefits based on arguments already rejected by the Tribunal, especially when their own actions, such as conditional approval, contradict their denial. The LAT's willingness to impose a deterrent award underscores its commitment to ensuring claimants are not left in vulnerable positions due to an insurer's "imprudent" or "inflexible" claims handling processes.

Lawyers representing claimants should note the Tribunal's readiness to award benefits as a deterrent against unjustified insurer conduct, even after preliminary rulings. Insurers, conversely, must critically review their claims handling procedures to avoid being deemed unyielding, particularly after adverse preliminary findings by the Ontario Licence Appeal Tribunal Zondervan. This case highlights the SABS conditional approval denial as a form of ongoing refusal, emphasizing the need for insurers to act responsibly and promptly. The LAT regularly interprets the SABS, as seen in other recent decisions, such as finding a carjacking incident not an accident under SABS on August 12, while an ATV crash causing traumatic brain injury was deemed an accident on August 4.

This decision from the Ontario Licence Appeal Tribunal establishes a precedent for penalizing insurers who engage in ongoing, unjustified denial of accident benefits, even after preliminary rulings. Lawyers representing claimants should note the tribunal's willingness to award benefits as a deterrent, while insurers must review their claims handling processes to avoid being deemed 'imprudent' or 'inflexible' and facing similar penalties.

Source: Original reporting via Canadian Lawyer