Car Insurance: Save More, Spend Less and Avoid Rip-offs

This imposition of vicarious liability was along with a legislative intervention relating to automobile insurance. In the Automobile Insurance Act, adopted within the Insurance Act in many provinces, certain features were imposed upon all automobile liability policies.

In particular, insurers was required to agree to provide cover against liability imposed legally upon the insured named within the contract and each other person who together with his consent personally drives an automobile owned by the insured for loss or damage, as a result of the ownership, use or operation from the motor vehicle. How to spend more and save less –  official statement

This provision addressed the problem posed by the normal law requirement of privity of contract  which had caused the Privy Council to deny the claim for indemnity from the daughter of a named insured owner within liability policy.  More generally, it ensured that, where the owner had liability insurance, its proceeds were available as compensation for a third party injured or otherwise not caused loss from the negligent operation with the insured vehicle. Quite simply, it made compensation extensively available. 

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An especially significant statutory modification of common law contract rules would be a provision giving a wounded third party a primary right of action from the insurer of the person – normally the automobile owner – primarily liable.  Unlike the direct action provided with respect to non-automobile liability insurance,  the right of action in automobile cases isn’t prejudiced by the insureds violation with the law or policy terms, or by the invalidity of the policy arising, as an example, from a material non-disclosure.  Although the insurer may, in a few circumstances, claim reimbursement in the insured, the clear purpose of this provision was, and it is, to make money available to injured victims. To obtain this benefit victims must still need a tort claim from the insured, but any contractual impediments related to the insured’s rights from the insurer do not prevent recovery.

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