Canadian Underwriter

How ride-sharing insurance on leased vehicles will change in this province

May 13, 2019   by Greg Meckbach

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Limiting financial risk to firms that lease out vehicles used for ride sharing is one aim of legislation before Ontario law makers.

Right now, the Insurance Act has limits on lessors’ vicarious liability but it “does not account for the use of ridesharing services such as Uber and Lyft,” a finance department spokesperson told Canadian Underwriter Friday.

In the part of the Insurance Act that limits lessors’s vicarious liability, a lessor could be either a financing company from whom motorists lease their vehicles or a rental company.

An owner’s vicarious liability means that a vehicle owner can normally be sued by an accident victim even that owner is a rental company or a leasing and auto financing firm.

Originally, the legislation limiting (but not eliminating) lessors’ liability was passed in 2006.

A new proposed change to lessors’ liability is in Bill 107, which transportation minister Jeff Yurek tabled May 2.

The 2006 law – spelled out in section 267.12 of the Insurance Act – was intended to apply when the driver of a leased or rented vehicle causes an accident and the victim sues. Section 267.12 stipulates that the insurance policy of the customer renting the vehicle – rather than the owner’s insurance policy –is the first to pay damages. The insurance policy of the driver (if not the same as the renter or lessee) is the excess payor while the owner’s policy would only kick in if the combined total of the driver and renter or lessee’s policy did not cover the entire claim. Moreover the lessor’s liability is limited to either $1 million, the amount of third party liability insurance required by law or an amount specified in regulation – whichever is greater.

But the section limiting lessor’s liability has an exception for a vehicle used as a taxicab, livery vehicle of limousine for hire. The words “unless the lessor or lessors of the motor vehicle and the lessee are dealing with each other at arm’s length” will be added to end of that clause on taxis if Bill 107 is passed into law.

This is intended to “limit the financial risks to limit the financial risks to vehicle financing businesses following a collision involving a leased vehicle where the lessor and the lessee are dealing with each other at arm’s length and the lessor does not know the vehicle is being used for ridesharing services,” the finance ministry spokesperson wrote Friday.

Also known as the Getting Ontario Moving Act, Bill 107 was last debated May 9. In addition to changing lessor’s liability in the Insurance Act, Bill 107 proposes several changes to the Highway Traffic Act.

The Getting Ontario Moving Act includes:

  • an increase penalties for driving too slowly in the left-hand lane;
  • a mandated zero blood alcohol/drug concentration for driving instructors;
  • creating an exception for motorists with personal-use pickups from the requirement for annual inspections; and
  • letting companies to apply for vehicle ownership permits, plates and stickers online without having to attend at ServiceOntario.