This article is a companion piece to this video

In this episode of On Subrogation: Subrogation in Canada, Rathbone Group insurance attorney Jason Sullivan discusses the difficulties associated with subrogating cases involving parties and/or automotive incidents that involve both US state and Canadian provincial laws on subrogation recovery.

As an experienced subrogation lawyer, Jason is licensed to practice law in many US states, including ones especially prone to these complicated types of subrogation cases, such as Alaska, Washington, Ohio, and Michigan. This has provided him a unique understanding of how to navigate motor vehicle insurance cases that cross our country’s northern border.

Congress v The Crown: Is There a Right to Subrogation in Canada?

There are two types of instances subrogation law firms tend to deal with when it comes to auto incidents involving the US and Canada:

  1. The insured is a US citizen who was involved in a motor vehicle incident in Canada.
  2. A Canadian citizen is involved in a motor vehicle incident with the insured while in the US.

Depending on the context, the approach to recovering losses via subrogation – if possible at all – requires a deft, diligent hand and a specified knowledge of the insurance recovery laws and rights to subrogation in the given jurisdiction.

For a similar discussion on how to navigate a subrogation case involving conflicts of law between different US states, read our article: Conflict of Law: Which State Has the Relevant Statute in a Subrogation Case?

Condition #1: When a US Citizen is Involved in a Motor Vehicle Incident in Canada

Jason cites one of the first cases he inherited as a subrogation attorney, which involved two unrelated Ohio residents involved in a car accident during separate fishing trips to Ontario. When the case came to Jason’s desk, it had already been in the courts for 6 years. Because of the difficulty of marrying the laws of the US v Canada, the case took an additional 3-4 years before it came to a resolution.

What were the obstacles involved here?

Assume your insured was not at fault in the incident that occurred in Canada. Is there a right to recover losses from a 3rd party if said party was at fault? Unfortunately, the answer is probably not.

Many of the eastern provinces in Canada use Direct Compensation to handle auto insurance cases. Direct Compensation functions similarly to no-fault in the US. Each party’s insurance takes care of the loss and there is no right to subrogation in order to recover paid losses. 

However, there are special exceptions, which is why carriers handling cases between borders need subrogation counsel familiar with and/or licensed in the relevant province. If you are in need of an insurance lawyer licensed in Canada, Rathbone Group’s network of North American subrogation law firms, lawyers and specialists can help. Inquire by emailing [email protected] or contacting one of our offices directly by phone.

Until just a couple years ago, residents of Washington had better chances than most if they were to be involved in a car accident in Canada. British Columbia and Alberta used to operate on a fault-based system, which made the subrogation process function much closer to how it is handled in the US. Unfortunately, BC switched to Direct Compensation in 2021, and Alberta followed in 2022.

Sometimes there just isn’t a path to recover losses from a 3rd party, even if there was negligence involved. While it is always smart to have a subrogation specialist take a second look at the viability of a subrogation claim, if the lawsuit is filed in Canada, most of the time carriers will not have a right to recover under a subrogation theory.

Condition #2: When a Canadian Citizen is Involved in a Motor Vehicle Incident in the US

What happens when the shoe is on the other foot? As a licensed subrogation attorney in many US state and federal jurisdictions, Jason is familiar with these types of subrogation cases, which tend to occur mostly in Florida and Hawaii – both states in which he is licensed to practice law. 

Consider a car accident between your insured, a resident of Florida, and a Canadian citizen on holiday in the US. In this case, say the Canadian is at fault. In determining the viability of insurance recovery, counsel must determine if there are subrogation rights for carriers in the state in which the incident occurred. If there are, it doesn’t matter much that the at-fault party is a foreigner. However, as with most subrogation cases, the courts make it tricky to properly pursue the tortfeasor. Namely, the Hague Convention.

The Hague Convention is an international law both the US and Canada have endorsed that protects due process when a lawsuit is filed in one country and the person being served lives in another. The Hague Convention sets forth specific rules by which you have to properly serve a person to put them on notice of a lawsuit. 

The Hague Convention makes achieving service expensive and a bit more complicated, but it protects the due process of the party being pursued. Each party must have the right to respond to a lawsuit and defend themselves. In these US v Canada motor vehicle subrogation cases, this often means personal service is required, and that the summons and the complaint must be translated into French, especially if the incident involves a resident of Quebec. 

On our side of the border, states often impose strict limits for these conditions of service. Hawaii is one of those states. That means a subrogation attorney dealing with an international insurance dispute in Hawaii must remain extremely diligent about ensuring their process server follows the Hague Convention to a T, and that the response if filed with the court within those strict deadlines.Interested in learning more about the subrogation process and insurance law? Visit Rathbone Group’s YouTube channel and podcast libraryfor discussions on critical subrogation topics. Have a topic we haven’t yet covered? Email us at [email protected] or [email protected] to see your suggestion covered on a future episode of On Subrogation.