As of July 1, 2017, the following vehicles will no longer be considered RBMs and therefore, will be defined as CMVs going forward:

1. Mobile equipment vehicles, which means:
   1. A mobile crane that is not built on a truck chassis (but not an off-road mobile crane);
   2. An excavator that is not built on a truck chassis (but not an off-road excavator);
   3. A street sweeper that is not built on a truck chassis (but not a low-speed street sweeper)
2. Vehicles constructed on a truck chassis
3. Vehicles that comply with, or are intended to comply with, Canadian federal safety manufacturing standards for highway vehicles or comparable standards from another jurisdiction

Impact

All motor vehicles must comply with the vehicle registration and licensing provisions set out in the Highway Traffic Act (HTA),¹ as well as the mandatory automobile insurance requirements pursuant to the Compulsory Automobile Insurance Act (CAIA).² As they are motor vehicles, CMVs are required to comply with these provisions, as well as, additional provisions specific to CMVs. The additional provisions include complying with: (1) Commercial Vehicle Operator's Registration (CVOR), (2) Hours of Service, and (3) Inspections. Some CMVs may be subject to additional Fuel Tax, Gasoline Tax, and Ontario Sales Tax.

RBMs are not subject to these compulsory registration and licensing requirements, as they do not fall within the definition of "motor vehicle", pursuant to the HTA and CAIA. Both Acts have the same definition of "motor vehicle", which excludes road-building machines from the outset.³

RBMs are also not permitted to operate on roads if they carry a load or draw a vehicle, unless...

Additionally, vehicles that have been reclassified as CMV's will no longer be limited to safety precautions which apply to RBMs, such as operating at 40 km/h on roads with a slow-moving vehicle sign.⁴ RBMs are also not permitted to operate on roads if they carry a load or draw a vehicle, unless (1) the load is essential to the road-building machine's primary highway construction or maintenance function; and (2) the vehicle carrying the load is being used for highway construction or maintenance.⁵ These restrictions do not extend to CMVs.

Implications for Insurers

1. Insurance Policy Changes

Vehicles fitting within the definition of RBM are insured under non-auto insurance policies as "contractors' equipment". However, those vehicles that have been reclassified as CMVs will now require both automobile insurance⁶ and motor vehicle liability insurance⁷ (for the operator) in order to be properly insured.

Motor vehicle liability insurance is mandatory for persons transporting goods for any other person for compensation.⁸ It provides coverage to the limit of at least $200,000 against liability resulting from bodily injury to, or death of, one or more persons, and loss or damage to property.⁹

2. Effect

a. Loss Transfer Request

By insuring the aforementioned vehicles under a commercial automobile insurance policy, insurers take on the risk of being on the receiving end of a loss transfer request.

CMVs can cause more damage to the passenger automobiles around them, than vice versa.

CMVs do not have operating restrictions, and are permitted to operate on roads at high speeds. Due to their size, weight, and nature, CMVs can cause more damage to the passenger automobiles around them, than vice versa. More damage can foreseeably translate into greater injury, higher accident benefit payouts, and eventually, a loss transfer request from the insurer of the other vehicle.

b. New Policy Coverage

Any equipment deemed an RBM is insurable under a commercial general liability policy as a piece of equipment. Motor vehicles are not covered within such policies and are required to have automobile insurance, as well as motor vehicle liability insurance (for the operator). Therefore, owners and employers will be required to take out separate policies on their CMVs, and ensure operators have proper coverage as well. In turn, insurers and brokers will need to ensure proper policy coverage to their clients and will need to be prepared to advise and assist clients with the necessary changes in coverage requirements.

c. Potential Coverage Disputes

There may be some confusion as to what constitutes the "use and operation" of a CMV, for the purposes of engaging an automobile insurance policy and determining coverage.

Whether a vehicle was in "use and operation" at the time of loss will determine whether said policy is engaged. Various relationships between an individual and a vehicle may constitute "use", regardless of whether the vehicle is turned on and/or in motion.¹⁰ With the re-classification of some vehicles as CMVs, activities which may previously have fallen outside of the scope of "use and operation of a motor vehicle", and therefore outside of the scope of an auto insurance policy, may now be covered by same.

Automobile insurers may be held liable for damages related to the "use and operation" of the insured CMV, even where that vehicle is not involved in a collision.

Automobile insurers may be held liable for damages related to the "use and operation" of the insured CMV, even where that vehicle is not involved in a collision. In Pilliteri v Priore,¹¹ the defendant successfully sought indemnification from the plaintiff's automobile insurer for damages caused to a building during the defendant's repair of the plaintiff's vehicle. The Court held that the repair constituted a "use" of the insured vehicle, and therefore, the insurer was liable to indemnify the defendant for his loss.

Conclusion

Ontario is increasingly becoming a more litigious province. As such, ensuring proper insurance coverage is essential to individuals and businesses alike. Brokers and owner/operators of equipment affected by this change to the definition of RBMs must ensure that not only do they have the proper form of insurance and coverages available to them, but that they comply with the other provisions of the relevant legislation that will soon apply to these newly designated CMVs. Failure to ensure uniform compliance with these new definitions will create an unnecessary increase in risk, which could otherwise be easily avoided in its entirety. As such, it is imperative that owners and operators add "ensure proper insurance coverage" to their list of errands in preparation for Canada's 150th birthday.

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¹ Highway Traffic Act, RSO 1990, c H 8.
² Compulsory Automobile Insurance Act, RSO 1990, C 25.
³ Supra note 1, s 1(1).
⁴ Ibid, s 76(2)2.
⁵ OReg 398/16, s 3 (to form the Jobs for Today and Tomorrow Act (Budget Measures).
⁶ Supra note 2, s 2(1).
⁷ Supra note 1, s 23(1).
⁸ Ibid.
⁹ Insurance Act, RSO 1990, c I 8, s 251(1).
¹⁰ For more information on the "use and operation" of a motor vehicle, see What is a Motor Vehicle and What Constitutes its Use and Operation: An Investigation into Policy Applicability and Coverage.
¹¹ 1997 CarswellOnt 1255, [1997] I.L.R. I-3451.

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