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This imposition of vicarious liability was accompanied by a legislative intervention concerning automobile insurance. In the Automobile Insurance Act, adopted within the Insurance Act generally in most provinces, certain features were imposed upon all automobile liability policies. In particular, insurers were required to agree to provide cover against liability imposed legally upon the insured named…

This imposition of vicarious liability was accompanied by a legislative intervention concerning automobile insurance. In the Automobile Insurance Act, adopted within the Insurance Act generally in most provinces, certain features were imposed upon all automobile liability policies.

In particular, insurers were required to agree to provide cover against liability imposed legally upon the insured named in the contract each other person who together with his consent personally drives a vehicle owned by the insured for loss or damage, due to the ownership, use or operation from the motor vehicle. How to spend more and save less –  click to read more

This provision addressed the problem posed by the common law dependence on privity of contract  which had caused the Privy Council to deny the claim for indemnity by the daughter of the named insured owner under a liability policy.  More generally, it ensured that, where the owner did have liability insurance, its proceeds were available as compensation for a third party injured or otherwise not caused loss with the negligent operation from the insured vehicle. In other words, it made compensation more widely available. 

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An especially significant statutory modification of common law contract rules was obviously a provision giving an injured third party an immediate right of action up against the insurer of the baby – usually 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 through the invalidity of the policy arising, for instance, from a material non-disclosure.  Although the insurer may, in a few circumstances, claim reimbursement from the insured, the clear intent behind this provision was, and is, to make money open to injured victims. To have this benefit victims must still have a tort claim up against the insured, but any contractual impediments related to the insured’s rights against the insurer don’t prevent recovery.