Vicarious liability reform law passes in Ontario

TORONTO — The Ontario government approved legislation last week limiting vicarious liability for owners of rented and leased vehicles.

The law — pushed by the Alexandria, Va.-based Truck Renting Leasing Association — freezes vicarious liability for owners of rented and leased vehicles at $1 million. That exposure is also reduced by any amount recovered from the actual operator of the vehicle, whose insurance becomes primary under the proposal.

Ontario is currently one of a handful of North American jurisdictions which holds the owner of a vehicle vicariously liable for the actions of the operator of the rented vehicle.

“Ontario clearly watched the dramatic developments in the United States culminating in the nationwide repeal of vicarious liability in August 2005. We took this opportunity to work with our Canadian allies in building upon that success to end this discriminatory practice in Ontario,” said TRALA President and CEO Peter Vroom.

An unprecedented November 2004 vicarious liability settlement of $12.8 million against Automotive Financial Services for an accident in Ontario heightened the concern of lessors.

Following the announcement of this settlement, TRALA immediately began working in Ontario to build support and raise the funds necessary for the legislative effort.

The bill is now awaiting Royal Assent, expected before the end of December. Following enactment, there is expected to be a phase-in period of about three months before the new law is implemented.

During this time, TRALA and its representatives will be working with its industry allies and the Financial Services Commissions of Ontario (FSCO) to incorporate the new law into Ontario’s insurance regulations and forms.