When does an insurer have to be added as a Statutory Third Party in Ontario?
An insurer must be added as a Statutory Third Party once it denies coverage to the operator of a vehicle involved in a lawsuit. Under s. 258(14) of Ontario’s Insurance Act, the court is obliged to include the insurer in the litigation the moment it takes the position that the driver is not covered — the plaintiff does not need to take any extra steps to force that outcome.
In Ogolla Otieno v. Osama Ahmed Hassan, 2026 ONSC 3235 (CanLII), the Ontario Superior Court of Justice addressed a cluster of procedural questions that arise whenever an auto insurer steps back from defending a driver. The decision is a useful primer on how courts manage these situations before trial.
What is a Statutory Third Party in an Ontario car accident lawsuit?
A Statutory Third Party is an insurer that is formally added to a lawsuit because it has denied coverage to the defendant driver. This matters enormously for an injured person. Without that formal addition, the insurer could sit on the sidelines, and any judgment against the driver might be unenforceable if the driver has no personal assets. Adding the insurer as a Statutory Third Party keeps the insurer on the hook and ensures there is a real source of compensation if the plaintiff wins.
The vehicle in this case was insured under an Ontario Owner’s Policy. The insurer denied coverage to the person who was actually driving at the time of the collision. Once that denial was made, the court confirmed it had no choice but to add the insurer to the proceeding under the Insurance Act.
Can an insurer’s affidavit be used to explain why it denied coverage?
Not if those statements are hearsay. The court found that the insurer’s affidavit contained statements about the reasons for the coverage denial without identifying the source of that information. Because the source was not disclosed, the statements were inadmissible hearsay and were given no weight at the motions stage.
This is a reminder that insurers — like any other party — must meet basic evidentiary standards. Vague, non-specific explanations for a coverage denial, unsupported by admissible evidence, will not carry the day in court. For injured plaintiffs, this ruling reinforces that an insurer cannot simply assert a reason for denial and expect a court to accept it without proper proof.
Should coverage and indemnity questions be decided before or after the negligence trial?
Generally, coverage and indemnity disputes are resolved after the negligence trial, not before. The court declined to give any advance directions to the trial judge on these issues while the pleadings were still open, applying the principle from Deonanan v Kwan and referencing Kapileshwar v Sivarajah.
The insurer’s request to have indemnity deferred to after trial was refused at this early stage because the motion was premature. The court was not prepared to lock in a procedural sequence before all the facts were developed through pleadings. Timing matters: bringing a motion too early can result in the court simply declining to rule.
Will the jury find out that an insurer is involved in the case?
That decision belongs to the trial judge, not the motions judge. The court reserved the question of whether the jury should be told about the insurer’s participation as a Statutory Third Party. The request to prevent the jury from learning about the insurer’s involvement was refused at this preliminary stage.
This is a sensitive issue in jury trials. Knowing that an insurer — rather than an individual defendant — will ultimately pay a judgment can influence how jurors assess damages. Ontario courts have long grappled with this, and the decision here confirms that the trial judge is the right person to manage that issue when the time comes.
Does this decision affect how personal injury claims are handled in Ontario?
Yes — it reinforces several procedural rules that shape how auto accident litigation unfolds. First, once an insurer denies coverage, its formal addition to the lawsuit is mandatory, not discretionary. Second, insurers cannot rely on vague or hearsay evidence to justify a coverage denial at a motions hearing. Third, courts will not entertain premature procedural motions that try to pre-determine how a trial will be structured before pleadings are even closed.
For anyone injured in a car accident in Ontario, these rules matter because they affect whether there will be a solvent defendant at the end of the road. Our Ontario employment lawyers regularly advise clients on navigating complex litigation involving insurance coverage disputes and other procedural hurdles — if your situation involves a coverage denial, understanding your rights early is critical.
Practical takeaways for accident victims and their counsel
- Confirm coverage status early. If the defendant’s insurer has denied coverage to the driver, ask your lawyer to ensure the insurer is formally added as a Statutory Third Party under s. 258(14) of the Insurance Act as soon as possible.
- Challenge hearsay evidence. If an insurer files an affidavit explaining its coverage denial without identifying the source of the information, that evidence can be challenged as inadmissible hearsay.
- Do not rush procedural motions. Motions brought before pleadings are closed may be dismissed as premature — timing your motions correctly is as important as the substance of the argument.
- Jury management is a trial issue. Questions about what the jury learns about insurer involvement should be raised with the trial judge, not resolved on a pre-trial motion.
- Get legal advice before the insurer’s position hardens. Once a coverage denial is issued, the litigation landscape changes significantly. Speaking with a lawyer promptly can protect your ability to recover compensation.
If you have been injured in a car accident and the at-fault driver’s insurer is denying coverage, UL Lawyers offers a free initial consultation from our Burlington office and serves clients across Ontario. Reach out to our personal injury and insurance litigation team to understand your options before critical deadlines pass.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
FAQ
Frequently asked questions
If the driver has no insurance, you may be able to claim compensation through the Motor Vehicle Accident Claims Fund or under the uninsured motorist coverage on your own policy. A lawyer can help you identify every available source of recovery.
Yes, an insurer can deny coverage if it believes the driver was not entitled to coverage under the policy — for example, due to an excluded use of the vehicle or a material misrepresentation. However, once it denies coverage and a lawsuit is started, it must be added as a Statutory Third Party under the Insurance Act.
In most cases, you have two years from the date you knew or ought to have known about your injury and its cause to start a lawsuit. There are also notice requirements for claims involving municipalities or other special defendants, so speaking with a lawyer early is important.