This imposition of vicarious liability was accompanied by a legislative intervention concerning automobile insurance. In the Car insurance Act, adopted included in 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 for legal reasons upon the insured named in the contract and every other person who along with his consent personally drives a car 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 – I was reading this
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 through the daughter of a named insured owner within liability policy. More generally, it ensured that, the location where the owner did have liability insurance, its proceeds were available as compensation to get a third party injured or otherwise caused loss through the negligent operation of the insured vehicle. In other words, it made compensation extensively available.
A particularly significant statutory modification of common law contract rules was a provision giving an injured third party an immediate right of action against the insurer of the individual – the automobile owner – primarily liable. Unlike the direct action provided with respect to non-automobile insurance, the right of action in automobile cases is not prejudiced by the insureds violation from the law or policy terms, or from the invalidity of the policy arising, for instance, from a material non-disclosure. Although the insurer may, in some circumstances, claim reimbursement in the insured, the clear reason for this provision was, and is also, to make money accessible to injured victims. To acquire this benefit victims must have a tort claim from the insured, but any contractual impediments regarding the insured’s rights against the insurer usually do not prevent recovery.