Plaintiff entitled to coverage despite driving with expired licence

Sometimes even when you win, you lose.

We previously blogged on Kozel v. Personal Insurance Co.  A copy of our previous post is found here.  In that case, the respondent was in an accident while driving with an expired licence.  She claimed she received her licence renewal documents in the mail and gave them to a dealership when she took delivery of a new automobile.  The applications judge held that the insured exercised reasonable diligence and was entitled to a defence.  He also held that she was not entitled to relief from forfeiture because holding a valid licence is a condition precedent of the policy.

The Court of Appeal reversed the judge on the issue of due diligence but held that the respondent was entitled to relief from forfeiture.

The offence of driving without a valid licence is one of strict liability for which a defence of due diligence is available.  An individual can make out the defence if s/he can show a reasonable misapprehension of facts or reasonable care with respect to the offence with which she can charged.  The Court held that Ms. Kozel was not able to show she acted with reasonable care - although she had renewed her licence for 60 years on time, this time she did nothing else to inquire about or even consider her renewal.  There was no due diligence and the appeal was allowed on that issue.

However, the Court held that the plaintiff was entitled to relief from forfeiture.  The analysis looks at three factors: the applicant's conduct, the gravity of the breach and the disparity between the value of the property forfeited and the damage caused by the breach.  The Court held that Ms. Kozek acted in good faith and the breach was relatively minor.  In addition, the disparity was enormous as Kozek stood to lose $1,000,000 in insurance coverage while there was "no prejudice to the insurance company".  The Court held she was entitled to relief from forfeiture.

One has to wonder how much the specific facts of this case impacted the ultimate result: what if it wasn't a little old lady?  What if she had a history of driving with an expired licence?  What if the claim was for only $10,000?  It will be interesting to see how this case is applied to future fact situations.