The Ontario government has proposed a resolution to the long-pending issue of unlimited vicarious liability for auto lessors. The resolution was introduced in Bill 107: “Getting Ontario Moving Act” on May 2 by Jeff Yurek, Minister of Transportation.
“The Getting Ontario Moving Act is a much-needed step forward in attaining legal clarity around the issue of unlimited vicarious liability,” said Howard Cobham, Senior Vice President, Dealer Services, Canada at GM Financial. “Removing the uncertainty and significant potential negative impact related to this issue will allow the auto industry to continue serving as one of the province’s most robust drivers of employment, economic value and community engagement and giving.”
The issue stems from a vehicle collision that resulted in a single rollover more than a decade ago. The lessee of the rental vehicle, a young woman, had reportedly sustained “devastating” injuries, according to a 2007 Canadian Underwriter article. In 2005, a settlement had been negotiated and the insurers of the leasing company ended up paying a significant portion of the settlement. Industry representatives from the leasing and car rental industries have sought to change the rules surrounding the vicarious liability ever since.
“They hoped to convince the Ontario government that lessees and renters of such vehicles should be treated as owners. Lobbying by both industries had achieved this result in the United States, but only after legislative intervention by the federal government,” said Canadian Underwriter.
Changes were made over time, but there was a lack of clarity for some time and the issue itself — the abolition of vicarious liability — had not been resolved. Now there’s a new twist to the issue with the arrival of ride-hailing companies such as Uber and Lyft.
A provision in the Ontario Insurance Act contains an exception that voids the $1 million liability cap if the leased vehicle is used as a “taxi” or “limousine”, according to an Impact Public Affairs news release. When this cap is void, the legal owners of the vehicle — the auto lessors, are suddenly exposed to “unlimited vicarious liability for personal injury and all other damage.” This is despite their lease agreement prohibiting the use of the vehicle for commercial purposes.
“This is a significant step forward for the car industry in this province and the thousands of Ontarians it employs,” said Michael Rothe, CEO & President of the Canadian Finance & Leasing Association. “B.C. now stands alone as the last jurisdiction in all North America where auto lessors face unlimited vicarious liability.”
The policy shift aligns Ontario with most Canadian provinces and the United States, and does away with the threat of multi-million-dollar lawsuits for financing companies.
