Vicarious liability of rental cars

What it does: In 2007 the catch-all Bill 35 amended the Insurance (Vehicle) Act and the Motor Vehicle Act to caps lessors’ liability at $1 million. This statute came into effect fall 2007.

At issue: IBABC is concerned that the definition of lessor in this act puts short-term rental vehicles in the same category as leases under conditional sales agreements.

In the vast majority of cases, vehicle leases are conditional sales agreements – in other words, a financing option – and people who lease vehicles have access to all the levels of insurance that vehicle owners have. People who rent vehicles for the day or week might have coverage under their policies for their owned vehicles that extend to non-owned vehicles. However, many do not. This is especially true for visitors to B.C. whose coverage may not extend outside their home country, and who don’t have other umbrella policies. If a pedestrian, passenger or other driver is seriously injured as a result of a crash involving a rental vehicle in B.C., it’s very likely that there could be no coverage to respond for the multi-million-dollar loss that results.

IBABC has urged government to adopt the same definition of lessor as Alberta uses in passing similar legislation last fall: that a “lessor” is a person or business that leases or grants exclusive use of a motor vehicle to another person for a term of more than 30 days.

Broker relevance: B.C. motorists who do not have RoadStar or Roadside Plus on their vehicle may need to purchase additional coverage when driving non-owned vehicles.

For information on the above: Trudy Lancelyn, IBABC, 604-606-8008, or click here.