Employees Who Rent Vehicles For Work: Liability Insurance Implications When Accidents Occur

The frequency with which employees rent vehicles for employment purposes is a common occurrence. Amendments to certain legislation in Ontario introduced a priority scheme for liability coverage, and corresponding changes to the standard Ontario Automobile Policy reconfigured personal coverage to apply to rental vehicles. These changes have given rise to the adjudication of an interesting legal issue whenever an employee rents a vehicle for work: Who is the "renter"...the employee or the employer?

Ontario's Legislative Scheme

The issue of "who is the renter¹" of a vehicle is really a determination of which insurer must respond first to a plaintiff's claim.

Introduced in 2006, amendments to the Insurance Act and the Highway Traffic Act were enacted to make renters liable for damages sustained by reason of negligence in the operation of a rented (or leased) vehicle and to relieve the insurer of the owner of a rented vehicle from being the first-loss insurer where