Coverage Territory Dispute under BAP

We would like your opinion about the following issue.

We have an insured that purchased a vehicle in California . The vehicle was being driven to Canada to an employee who is domiciled in Canada; ultimately, the vehicle would have been domiciled in Canada . In route, however, before delivery of the vehicle was made to the employee, the vehicle was involved in an accident in Canada . The insurer is denying coverage for the claim on the basis that the vehicle was domiciled Canada and the BAP does not cover such vehicles. Is this correct?

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