Risk Management

Risk Management Advisories

AUTOMOBILE INSURANCE

Focus on...
  • notify OSBIE when acquiring or deleting vehicles from fleet
  • Co-op students should not drive customers' or employers' vehicle
  • students should not drive vehicles in auto shops
  • avoid using student "trip drivers"
  • strictly control car keys
  • "trip drivers" sign volunteer form
  • Proper driver license requirements for school purpose vehicles (e.g. passenger vans)

The principal items addressed in this bulletin include:

  1. Fleet Automobile Insurance for School Boards
    1. fleet insurance for school board owned/leased automobiles
    2. newly-acquired automobiles
    3. liability certificates
  2. Non-owned Automobile Insurance
    1. purpose
    2. coverage for school boards
    3. coverage for individuals
    4. insurance on personal automobiles used for school trips
    5. rented automobiles
    6. co-op education
    7. liability limits on vehicles operated on behalf of school boards
  3. Automotive Shop Courses Conducted on School Premises
    1. legal liability for damage to non-owned automobiles
    2. legal liability for bodily injury and/or property damage
    3. completed operations liability
  4. License Requirements for School Purposes Vehicles
    1. licensing and vehicle requirements
    2. insurance considerations
    3. purpose of reguations

1. Fleet Automobile Insurance

a) Fleet Automobile Insurance for School Boards

Automobile insurance is provided through a standard Owner's Policy on a fleet basis to school boards to cover vehicles owned by school boards or leased (over 30 days) to school boards.

b) Newly-Acquired Automobiles

Under a fleet automobile policy, any NEWLY-ACQUIRED AUTOMOBILE, unless insured under another policy, is considered an insured vehicle if it replaces an existing vehicle or is an addition to the fleet of vehicles insured under the OSBIE policy.

Conditions:

Two main conditions to be met for this automatic extension of coverage to take effect are:

  1. The Insured must have acquired the vehicle (i.e. taken delivery or ownership).
  2. The Insured must notify the Insurer (OSBIE) within 14 days of the vehicle acquisition date.

c) Liability Certificates

Proof of insurance in the form of a liability certificate must be carried in each vehicle.

To secure a liability certificate for a newly-acquired vehicle, immediately notify OSBIE upon taking possession of the vehicle. Fax or email a copy of an Automobile Change Form to OSBIE the day a vehicle is transferred. OSBIE can then issue a liability certificate with the correct VIN (serial number) effective the date of possession. A copy will be faxed or e-mailed to the school board and the original will be mailed.

Local police authorities have confirmed that a vehicle may be operated with a facsimile (FAX) copy of the liability certificate until the original arrives. In the event a newly-acquired vehicle is involved in an accident before the original certificate arrives, it is likely the Board will be required to produce the original within 72 hours. If this occurs, contact OSBIE immediately, and a certificate will be sent via courier.

2. Non-Owned Automobile Insurance

a) Purpose

Non-owned automobile liability insurance is designed primarily to pay claims in excess of the insurance carried on a vehicle not owned by the board or another insured while being used or operated on board business. In all cases, the Insurance Act stipulates that a vehicle owner's insurance is primary to any non-owned automobile liability insurance policy. For example, if the limit of liability coverage on the owner's vehicle were $1,000,000 and a claim cost a total of $2 million, the automobile insurer would pay the first $1,000,000 and the non-owned automobile liability policy would pay the next $1.0 million.

b) Coverage for School Boards

Non-owned automobile liability insurance provides protection to a school board against liability imposed by law upon the school board for loss or damage arising out of the use of or operation of any automobile not owned in whole or in part or licensed in the name of the school board  but which is being operated on school board business.

Coverage is also provided to protect school boards which have, by resolution or contract, assumed responsibility on behalf of employees, volunteers, trustees, and others for the legal liability for losses arising out of the use of their own vehicles or another person's vehicle on board business.

Such coverage is excess of insurance carried by the owner of the vehicle or $200,000 whichever is higher.

c) Coverage for Individuals

Employees, trustees, volunteers, parents, students, and other individuals are protected while operating a vehicle not owned by them on board business. Further, they are protected while operating their own vehicles on board business, such as field trips. Driving to and from work is not considered board business. Again, coverage is excess of any vehicle owner's insurance coverage

d) Insurance on Personal Vehicles Used for School Trips

If the use of a personal vehicle to transport students to school activities is infrequent or occasional, the personal automobile insurance policy automatically extends coverage to the vehicle owner and authorized drivers.

If the personal vehicle is used regularly to transport students, then the vehicle owner should notify his agent, broker or insurer and ask that a rider be added to the policy to extend coverage for such usage.

Individuals will be protected by school boards which have assumed responsibility for loss or damages exceeding the limit of insurance carried on their own vehicles or $200,000, whichever is higher, while transporting students on school trips.

e) Rental/Temporary Substitute/Donated/Borrowed Vehicles

  1. Rental Vehicles

    In 2006, changes to the Ontario Highway Traffic Act and the Insurance Act made the personal automobile Third Party Liability of a RENTER of any vehicle in Ontario the primary coverage. To address cases where employees rent vehicles to conduct school board business in Ontario, effective January 1, 2007, OSBIE members carrying their Fleet Auto insurance with OSBIE can purchase an endorsement to make the board’s Third Party Automobile Liability coverage primary.  For this endorsement to apply, any vehicles rented by employees for school board business up to 30 days must be in the name of the school board.  (Contact OSBIE for further information or if you wish to purchase this optional endorsement).

    Legal Liability for damage to non-owned vehicles is covered for rental vehicles under the Comprehensive General Liability policy, Endorsement #2, subject to a $250 deductible.  From a risk management perspective, however, it is recommended that school boards advise employees to purchase the Deductible Waiver coverage available on a daily rate through the rental agency.  This will make the rental agency’s coverage primary if there is any damage to the rental vehicle itself, and will reduce the effect of claims experience rating on the school board’s premiums

  2. Temporary Substitute Vehicles

    Vehicles that are rented as temporary substitute vehicles to replace board-owned vehicles damaged in an accident would be covered by the board's fleet automobile insurance policy. The fleet automobile insurer should be notified before making arrangements for temporary substitute rental vehicles.

  3. Donated/Borrowed Vehicles

    At times, school boards may be offered the use of donated or loaned vehicles from car dealerships for school purposes. In all but a few exceptions, the dealer will carry primary insurance on these vehicles for Third Party Liability Insurance as part of a Garage Automobile policy. Despite the presence of primary coverage under the dealer’s insurance, school boards are often asked to provide primary coverage for these vehicles as a condition of the donation. However, because ownership is not transferred to the school board, there is no means of providing primary liability insurance coverage under the board’s Fleet Automobile policy, and Non-Owned Auto policy provides coverage only in excess of the owners liability limit.

    School boards should not accept donated or borrowed vehicles unless the owner carries valid Third Party Liability automobile insurance

f) Co-op Education

The non-owned automobile insurance policy does not extend to protect co-op students or their employers where co-op students are driving an employer's vehicle or a vehicle belonging to a customer of an employer. The co-op student would be driving a vehicle on the business of the employer, not the school board. Students who drive vehicles of employers while on co-op assignment do so at the employer's risk. Students who drive their own vehicles either to the co-op assignment, or on the co-op work assignment, do so at their own risk and their own insurance coverage would respond in the event of an accident.

g) Liability Limits on Vehicles Operated on Behalf of School Boards

Risk management is important to school boards. One area through which school boards can reduce their exposure to risk is to ensure that others operating their vehicles on behalf of the school board are adequately insured.

On June 27, 1996, the Ontario Ministry of Transportation issued a news release proclaiming changes to the Highway Transport Act and the Public Vehicles Act.

School boards that operate their own school bus fleets or that contract with independent bus operators should be aware of the changes outlined in the revised Regulation 982 of the Public Vehicles Act.

The current Third Party Liability insurance limits for school buses as of 2015, are as follows:

Seating Limits
1 to 7 $1,000,000
8 to 12 $5,000,000
13 plus $8,000,000

School boards that insure their own bus fleets with OSBIE can be confident that their limits are well in excess of the new provincial minimums outlined above. School boards that have contracts with independent operators should ensure that those operators are carrying at least the minimum limits and even more.

Liability Limits for Teachers and Volunteers

We suggest that school boards recommend that a liability limit of $1,000,000 be carried by teachers and volunteers. More people are now purchasing limits of $2,000,000 which are available at reasonable additional cost. The minimum required by law is $200,000.

Liability Limits for Taxis

Taxis should carry the minimum limits, outlined in (g) above, based on seating capacity.

3. Automotive Shop Courses Conducted on School Premises

OSBIE provides protection in the following areas:

  1. Legal Liability for Damage to Non-Owned Automobiles
  2. Legal Liability for Bodily Injury and/or Property Damage
  3. Completed Operations Liability

Coverage is not provided for vehicles owned by a school board or another Insured under the non-owned automobile liability policy. The reason for this exclusion is that an Insured cannot be legally liable unto oneself.

a) Legal Liability for Damage to Non-Owned Automobiles

Through Endorsement # 2, OSBIE agrees to pay for damage, for which the board is legally liable, to any automobile not owned by or licensed in the name of the board or another Insured while it is in the care, custody and control of either. Therefore, should a customer's vehicle be damaged accidentally while it is being worked on, (e.g. a blow-torch sets the vehicle ablaze), OSBIE will pay for the cost of repairs subject to a deductible of $250 per occurrence. Should the vehicle be vandalized, stolen, etc. while located on school premises, resulting damages would not be paid as the board, its employees and students would not be legally liable unless it can be established that they were negligent by failing to provide adequate security.

b) Legal Liability for Bodily Injury and/or Property Damage

Through Endorsement # 5, OSBIE will pay, up to the policy limits, for any injuries and/or property damage caused by an Insured while operating a customer's vehicle, eg., test drive, on a first loss basis. Here are four scenarios to consider:

Student backs a customer's car out of the school auto shop and:

  1. Hits the wall of the garage damaging the vehicle, but causing no damage to the wall....OSBIE will pay for the damage to the vehicle subject to a $250 deductible.
  2. Hits a neighbour's fence, knocking it down but causing no damage to the vehicle.....OSBIE will pay for the damage to the neighbour's fence.
  3. Hits the principal's car parked in the lot, causing damage to the principal's car....Under Ontario's automobile insurance plan, the principal's automobile insurer will pay for the damages to the principal's car without any penalty to the principal's driving record, since the student was at fault.
  4. Crosses a busy street, striking a vehicle carrying four passengers, causing extensive damage to the vehicles and serious injuries to the passengers... Under Ontario's automobile insurance plan, the damages to the vehicle struck by the vehicle driven by the student are paid under the automobile liability insurance carried by the owner of that vehicle. Passengers injured would seek benefits under their own personal automobile policies first for Section B benefits. If a passenger did not own a vehicle, then the passenger could claim Section B benefits from the insurer of the vehicle in which he/she was a passenger or from the board's insurer, OSBIE. Since the injuries were serious, then the injured parties could claim against the student driver and the school board. Both would be protected by OSBIE on a first loss basis. Damages to the vehicle driven by the student would be covered by OSBIE subject to a $250 deductible.

4. License Requirements for School Purposes Vehicles

We have received numerous calls from various boards regarding proper licensing and Ministry of Transportation requirements for vehicles deemed to be "school purpose vehicles" used occasionally to transport students on field trips, sports games, etc.

Ministry of Transportation officials have been very helpful in providing information for this bulletin. Boards should contact their local branches of the Ministry of Transportation for further clarification on details of the Highway Traffic Act

Licensing and Vehicle Requirements

Seating capacity is the key determinant, not the number of passengers actually being carried.

Vehicles are divided into three categories based on seating capacity:

  1. 5 passenger seats plus the driver.

    The only requirement is that the driver carry a valid driver's licence with a "G" class.

  2. 6 to 9 passenger seats plus the driver.

    If the vehicle is owned, leased or rented in the name of the board, or operated under contract with the board, the driver must carry a valid "G" class licence and the vehicle must have safety inspection stickers, carry a logbook and conform with Regulation 611.

    "Under contract" is a key phrase. We all know that legal consideration (compensation) always forms an integral part of a contract.

    Regulation 611 defines compensation as: "...any rate, remuneration, reimbursement or reward of any kind paid, payable or promised or received or demanded, directly or indirectly."

    As far as the Ministry of Transportation is concerned, any form of remuneration (ie., mileage, gas allowance, flat fee, etc.) paid by the board to anyone to transport students enters into a contract with the board. Therefore, any vehicle in this category owned, leased or rented by a volunteer, teacher, employee, parent, student, etc. used to transport students in return for some form of remuneration is deemed to be under contract with the board.

    If no remuneration is paid Regulation 611 does not apply.

    A class "G" licence is required by the driver.

  3. 10 to 24 passenger seats plus the driver.

    If the vehicle is owned, leased, or rented in the name of the board, the driver must carry a class "E" licence and the vehicle must meet all of the "school purpose bus" regulations under the Highway Traffic Act.

    If the vehicle is owned, leased, or rented by a volunteer, teacher, parent, student, employee, etc. and no payment is made by the board for the occasional transportation of students, then the driver must carry a class "F" licence if the vehicle will seat more than 11 passengers and the vehicle need not meet the "school purposes bus" regulations under Highway Traffic Act.

    Regulations under the Highway Traffic Act are very stringent and violation of these regulations could result in a fine, licence suspension or such other penalty as permitted by the Highway Traffic Act.

Why All of These Reguations?

Over the years, more and more safety requirements have been legislated to ensure the safe passage of children within the educational program. It is the responsibility of the school boards to be aware of all regulations with respect to the transportation of children and ensure that these regulations are being met. After all, it is the safety of the children that is paramount.

The chart below summarizes the licencing and vehicle requirements:

Status of Vehicles Passenger Capacity Minimum Driver License School Prupose Vehicle Requirements as per Highway Traffic Act
Rental vehicle,
Owned by Board,
Operated under Contract
1 to 5 G - NONE
Rental Vehicle,
Owned by Board, Operated Under Contract
6 to 9 G - Safety Inspection Sticker - Log Book - Other Regulations per Contract Reg. 483 (611)
Rental Vehicle,
Owned by Board,
Operated under Contract
10 to 24 E - As per School Purpose Bus regulations under the Highway Traffic Act
Volunteers,
Teachers,
Employees
1 to 5 G - NONE
Volunteers,
Teachers,
Employees,
NO CONTRACT
6 to 11 G - NONE
Volunteers,
Teachers,
Employees,
NO CONTRACT
12 to 24 F - As per Highway Traffic Act "f" or this type of vehicle

 

Questions & Answers

Q. If a van is rented in the name of a school board on occasion to transport students to a field activity, is it a "school purpose vehicle" under the Highway Traffic Act?
A. YES
Q. If a van is rented in the name of a teacher on occasion to transport students to a field activity, is it a "school purpose vehicle" under the Highway Traffic Act?
A. If no reimbursement paid by board to teacher, NO.

If reimbursement paid by board to teacher, YES.
Q. If a van is owned or rented by a teacher, parent, student or volunteer and is used to transport students on occasion to field activities, is it a "school purpose vehicle" under the Highway Traffic Act?
A. If no reimbursement paid by the board, NO.

If reimbursement paid by the board, YES.
Q. If a private passenger vehicle with a passenger seating capacity of 5 owned by a teacher, parent, student or volunteer is used to transport students occasionally to field activities, are there any requirements under the Highway Traffic Act?
A. Whether reimbursement paid by the board or not, NO.
Q. What are the alternatives available to school boards?
A.
  1. Ask more parents and volunteers to transport students in their 5 passenger vehicles.
  2. Locate rental agencies with vans in their fleets which meet the requirements of a "school purpose vehicle".
  3. Utilize public transportation where available.
  4. Ensure that drivers are properly licenced and that vehicles meet regulations.
  5. Rent from school bus transportation companies.
  6. Hire both vehicle and driver from licenced transportation company.

Risk Management Tips

  1. School boards should ensure that a proper resolution has been passed to protect individuals operating vehicles on school board business.
  2. School boards should clearly define "trip drivers" regarding volunteer and staff drivers on school board business.
  3. Ensure that owners of vehicles being operated on school board business carry adequate limits of liability insurance.
  4. Vehicles being rented by school staff should be rented in the name of school board.
  5. Students should not be permitted to drive or operate vehicles that are in the care, custody and control of a school auto shop.
  6. Students should be absolutely prohibited from driving customer's automobiles on public highways.
  7. Co-op student employer's should be made aware that no automobile coverage is provided by the school board to protect the co-op student or the employer for liability arising out of the operation of a vehicle belonging to the employer or to a customer of the employer.
  8. Students should be discouraged from transporting other students to school events.
  9. Ensure that operators of school purposes vehicles are properly licensed and that the vehicles meet Highway Traffic Act requirements.
  10. Comply with regulations, don't try to circumvent them.

(REVISED 2015) E&OE
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