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

Specifically, insurers was required to agree to provide cover against liability imposed by law upon the insured named inside the contract each other person who along with his consent personally drives a vehicle owned by the insured for loss or damage, as a result of the ownership, use or operation of the motor vehicle. How to spend more and save less –  one-time offer

This provision addressed the issue 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 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 any third party injured or otherwise caused loss through the negligent operation of the insured vehicle. Put simply, it made compensation more widely available. 

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A really significant statutory modification of common law contract rules would be a provision giving an injured third party an immediate right of action against the insurer of the person – the automobile owner – primarily liable.  Unlike the direct action provided with respect to non-automobile insurance,  the right of action in automobile cases just 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 some circumstances, claim reimbursement from your insured, the clear purpose of this provision was, and it is, to make money open to injured victims. To have this benefit victims must still need a tort claim against the insured, but any contractual impediments regarding the insured’s rights from the insurer do not prevent recovery.

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