Vicarious Liability. How does it impact you?
Leasing a vehicle is another option to purchasing one. It's advantageous because your vehicle is under continuous warranty and you may have the option to change to newer models.
However, it can also be very expensive over a period of time compared to purchasing a vehicle. Insurance coverage when concerned with the leasing of a vehicle is a very intricate issue that has had amendments made to it over the years.
One of the more impactful changes is that of the implementation of Bill 18. This bill was enacted on March 1st 2006 and encompasses "vicarious liability". Before this date, individuals who rented or leased vehicles were not directly held liable for negligent driving. Unlimited liability fell onto the Owner's shoulders. Now, lessees (the people who rent or lease vehicles) can be sued.
The goal of vicarious liability is to limit and lessen the liability that is placed on the lessor (owner of the vehicles being leased) and to place primary liability on that of the person leasing the vehicle. Now, the order of response to an accident by Insurers is firstly through the Lessee's policy, then the Operators, then finally the Owner's excess (where they are insured for up to one million dollars minus the insurance available from the primary and secondary policies).
The changes to Bill 18 did not stand alone. In order to be implemented, other changes had to be made to both the Compulsory Automobile Insurance Act and the Highway Traffic Act in Ontario. This came on the heels of owners of car rental and leasing companies arguing that they should not be held solely liable for the negligence of their clients. Leasing was just another way of acquiring a vehicle even though legally it was not owned by the operator.
The case of Xu v. Mitsui Sumitomo Insurance Company Limited explored the issues of vicarious liability through a leasing company's insurance policy.
In the middle of 2006, J. Xu was injured in a motor vehicle accident. He was a passenger in a vehicle driven and leased by J. Lu from Toyota Credit Canada Inc. (TTCI) who came into contact with another vehicle driven by J. Tui. The insurance companies of Lu and Tui both accepted liability and offered to honor their policies, which both have a cap at one million dollars.
The plaintiff attempted to seek further compensation from TTCI through the leasing policy they entered with the driver of the vehicle that he was travelling in. The plaintiff argued that there was a certain amount of legal limbo in the law surrounding this issue during that time period.
They claim that it was not until the implementation of the "OEF 110" in January of 2008 that it was specified that lessees weren't covered under a lessor's insurance policy. With this, the applicant believes that the respondents (the Insurers of TTCI) should honor their policy and provide compensation.
The presiding Judge in the Ontario Superior Court of Justice ruled that within the Insurance Act, provisions were made that ensured that the one million dollar cap would be held between 2006 and 2008 "despite any other provisions". He also looked at the policies themselves and found that nowhere did they offer to provide coverage to the lessee/operator of the vehicle, Lu.
Your initial consultation is free, so if you are hurt in any capacity, give us a call to find out what your options are, and how we can help get you started on your road to recovery.
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