Ontario changes liability for rented vehicle collisions

The Ontario government is amending the province’s Insurance Act so that motor vehicle liability policies carried by the customers of leasing and rental companies are first in line for liability for any damages arising from accidents caused by the negligent operation of a leased or rented motor vehicle.The amendments, effective March 1, 2006, will also limit the vicarious liability of leasing and rental companies for damages for bodily injury and death caused by their customers. Leasing or rental companies would only be liable for damages due to bodily injury or death to a maximum of the greatest of the following: $1 million the amount of third party liability insurance required by law; any amount determined by regulations.These maximum amounts are reduced by any amounts recovered under the third party liability provisions of any motor vehicle policies issued to the customer or any other persons with respect to the same accident. The maximum amount is not reduced by amounts paid under uninsured automobile coverage or by the Motor Vehicle Accident Claims Fund, or any other amounts determined or prescribed by regulation.The amendments also change the order in which insurers respond to liability claims arising from accidents involving a leased or rented vehicle. The new order, for example, requires that the motor vehicle policy of a lessee or renter who is a named insured in the rental or leasing contract pays first. Insurance under which the driver may be entitled to indemnity a driver’s policy, for example, or “drive other automobile coverage” would pay in excess of the lessee’s policy. Third, the insurance of the owner of the vehicle would pay only in excess of the driver’s and lessee’s policies.