Overlapping Auto Coverage In The New Age

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The Alberta government, in its wisdom (or lack thereof) has recently changed the rules for situations of overlapping auto coverage. In this paper, I will summarize the changes with a particular focus on non-owned auto policies.

There are a number of scenarios where litigants associated with an automobile, against whom a liability claim is being advance, are covered multiple insurance policies that would cover the loss. This arises frequently where the defendant driver is operating a vehicle owned by someone else (eg. a leased or rented vehicle) or where the driver’s vehicle is financed with the vendor or some third party financial institution hold title to the vehicle until the last payment is made. The defendant driver’s employer can also be sued in vicarious liabilty pursuant to the Traffic Safety Act, R.S.A. 2000, c. T-6, s. 187 or even direct liability (eg. negligence for failing to reasonably train employee drivers, negligent maintenance, etc.)

In particular, parties not directly tied to the operation of the vehicle, such as a lessor or a financial institution in a conditional purchase situation, are exposed to liability pursuant to the Traffic Safety Act. If the lessee or purchaser has been irresponsible in terms of arranging for coverage on the vehicle, a lessor or bank may be forced to step up to the plate and indemnify the driver for liability claims.

A number of different types of policies may be involved, including...

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