Ontario passes vicarious liability reform

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TORONTO, Ont. — The Ontario Legislature has approved legislation limiting vicarious liability for owners of rented and leased vehicles. The legislation limits the vicarious liability exposure of long-term and short-term vehicle lessors to $1 million, less any amount recovered from the lessee.

The legislation also amends Ontario’s statutory priority of payment requirements making the lessor’s insurance secondary to the lessee’s insurance. The vicarious liability reform provisions were passed as part of a larger Ontario budget bill. The bill is now awaiting Royal Assent, or enactment, which it should receive 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.

“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 Truck Rental and Leasing Association (TRALA) President and CEO Peter Vroom.

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

Following the announcement of this settlement, TRALA said it immediately began working in Ontario to build support and raise the funds necessary for the legislative effort. TRALA said it will continue 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 during the phase-in period.

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