How insurance responds when vehicles are used as weapons

If a rental vehicle is used as a murder weapon, the insurer could be on the hook if neither the driver nor the person renting the vehicle have auto insurance.

Ten pedestrians died Monday in Toronto after a rental van was allegedly driven on sidewalks on Yonge Street near Finch Avenue, the Canadian Press reported.

Charged with 10 counts of first degree murder and 13 counts of attempted murder was Alek Minassian, who made a court appearance Tuesday and is remanded in custody, an Ontario Ministry of the Attorney General spokesperson told Canadian Underwriter.

Yonge Street was closed in Toronto after a van mounted a sidewalk crashing into a number of pedestrians on April 23, 2018. THE CANADIAN PRESS/Nathan Denette

While many liability insurance policies exclude intentional and criminal acts, standard auto liability policies in Ontario do not automatically exclude criminal acts. Section 258 (4) of the Insurance Act states that a person’s right to “have insurance money applied” to a judgement is “not prejudiced” by a criminal act. Section 118 of the Insurance Act stipulates that breaking the law “does not, by that fact alone, render unenforceable a claim for indemnity” under an insurance contract.

Sections 118 and 258 of the Ontario Insurance Act “operate so that the insurer of the driver would have to respond to any claims” in an incident such as Monday’s tragedy in Toronto, said David Contant, an Ottawa-based lawyer for Nelligan O’Brien Payne, in an interview with Canadian Underwriter Tuesday. “The insurer of a rental vehicle is responsible for indemnifying a claimant, but only if the lessee and driver are not insured.”

Related: Ten dead, 15 injured in Toronto van pedestrian attack

Essentially this means that if a rental vehicle insured in Ontario is used as a weapon, and either the driver or the person renting the vehicle has his or her own Ontario auto policy, “the rental company would have to be negligent in some fashion” in order for the auto liability insurance on the rental vehicle to kick in, Contant suggested.

It would be “difficult to establish liability” on the part of a rental company “short of there being some indication that the individual renting the vehicle was in obvious distress or unwell or exhibiting something that could have been picked up on by the rental company,” Contant said.

Where there are multiple plaintiffs, a pedestrian may need to claim on his or her OPCF 44R family protection endorsement – if that plaintiff has his or her own auto insurance. Among other things, the family protection endorsement covers an accident victim if the at-fault driver does not have enough liability insurance to pay the victim.

Family protection coverage is an optional additional add-on to a standard auto policy. “It’s a pretty common purchase, but not everybody has it,” Contant said.