Our April 29, 2025, bulletin, Driving New Standards: An Overview of Automated and Connected Vehicle Governance,[1] outlined the regulatory framework governing connected and automated vehicles (“CAV” / “CAVs”) in Canada, the European Union, and the United States, including the SAE International’s[2] Six Levels of Driving Automation and the division of jurisdiction over CAVs between Transport Canada and the provinces. Regulatory compliance, however, is only one piece of the puzzle. An important question remains: who bears liability when a CAV is involved in an accident?
This bulletin examines how civil liability is allocated under the Automobile Insurance Act (the “AIA”) and the Civil Code of Québec (the “CCQ”) when a vehicle operates in autonomous mode. The insurance market’s response will be the subject of an upcoming bulletin.
How Québec’s Civil Liability Regime Governs CAVs
The Compensation Regimes for Bodily Injury and Property Damage
In Québec, automobile accident losses are compensated under two distinct regimes. The introduction of autonomous driving technology does not alter the distinction between these two compensation regimes, but it may make them more difficult to apply, particularly with respect to compensation for property damage.
For bodily injury, the AIA establishes a no-fault compensation scheme administered by the Société de l'assurance automobile du Québec (the “SAAQ”). Any Québec victim of a motor vehicle accident is compensated, regardless of the cause of the accident, whether due to software failure, a defective sensor, a cyberattack or driver error. As a result, for bodily injuries covered under this regime, civil actions against the driver, owner or manufacturer are generally barred. This is the advantage of Québec’s no-fault model compared to a tort-based common law system: victims of bodily injury are compensated quickly, without disputes over the nature of the injury or issues of causation.
For property damage, on the other hand, the AIA establishes a liability and compulsory insurance scheme, supplemented by the ordinary rules of civil liability, except to the extent that sections 108 to 114 of the AIA provide otherwise. It imposes a mandatory minimum third-party liability coverage of $50,000 for passenger vehicles. That minimum increases to $1,000,000 for certain road transport owners or operators and to $2,000,000 when transporting dangerous goods in quantities exceeding regulatory thresholds. Property damage is the aspect that becomes more legally complex when CAVs are involved.
The Direct Compensation Agreement: The Primary Mechanism for Resolving Property Damage Claims
In practice, compensation for property damage in Québec is provided through the Direct Compensation Agreement (the “DCA”).[3] Established by the Groupement des assureurs automobiles (the “GAA”) under section 173 of the AIA, the DCA is the agreement that binds all licensed automobile insurers in Québec. It applies to any collision occurring in Québec between at least two vehicles, or between a vehicle and the load of another vehicle, whose owners are identified, subject to certain exclusions, including collisions involving only vehicles belonging to the same owner or a driver colliding with their own vehicle.
The mechanism has two core components. On the one hand, each insurer directly compensates its own insured for property damage sustained, to the extent of the liability of the drivers of the other vehicles involved. On the other hand, section 116 of the AIA limits the owner’s recourse by providing that, where the DCA applies, such recourse may be exercised only against the owner’s own insurer. The allocation of liability between drivers is determined through the Fault Determination Chart annexed to the DCA, which codifies common accident scenarios and assigns a fixed percentage of liability to each driver.
This framework has three implications for CAVs.
First, the Fault Determination Chart was designed for conventional vehicle collisions and decisions made by human drivers. It codifies common situations such as rear-end collisions or lane-change collisions, and assigns liability based on the relevant scenario. The allocation of liability under the Chart may become less straightforward when the driving decision is made by a driver assistance system (“ADAS”) operating within its operational design domain. However, where accidents involve CAVs, insurers will have to continue applying the Chart to allocate liability among insureds based on its prescribed scenarios until CAV-specific rules are adopted.
Second, although section 116 of the AIA addresses an owner’s recourse against their own insurer where the DCA applies, it does not govern recourse against a vehicle manufacturer, software developer or technology provider. Under article 2474 of the CCQ, an insurer of a driver involved in a collision is subrogated to the insured’s rights against such third parties. The AIA does not preclude automobile insurers from seeking subrogation against such third parties where an accident was caused by a vehicle defect or malfunction. Following compensation, where an accident is due to a failure of the vehicle’s integrated software, an insurer could seek recovery under the ordinary rules of civil liability. The insurer could seek to hold the vehicle manufacturer, software developer or technology provider liable on several grounds, including contractual liability, extracontractual (tort) liability, safety defects, latent defects, or false or misleading representations regarding the capabilities of the ADAS.[4]
Third, in the context of a manufacturer operating its own fleet of robotaxis, the application of the DCA will depend on the particular circumstances. A collision between an insured robotaxi and an identified third-party vehicle may still fall within the scope of the DCA. The most problematic cases are those where several vehicles belong to the same owner, where the operator benefits from a specific insurance or self-insurance scheme, or where the dispute shifts to a manufacturer or technology provider outside the DCA framework. Accordingly, compensating property damage claims may require moving beyond the DCA framework and reverting to the ordinary rules of civil liability.
Articles 1457, 1465 and 1468 CCQ: A Framework Designed for Human Drivers
The analysis under the ordinary rules of civil liability is structured around three provisions.
Article 1457 of the Civil Code of Québec establishes the general rules governing extra-contractual liability. It applies where a person’s conduct falls short of the standard expected of a reasonable person. At automation levels where the driver remains in continuous control, namely driver assistance (Level 1) and partial automation (Level 2), the traditional rules of driver liability continue to apply. Despite the presence of driver-assistance features, such as adaptive cruise control, lane-keeping assistance and emergency braking, drivers remain liable under the ordinary rules of civil liability for careless driving, failing to obey a stop sign or speeding.
Article 1465 of the CCQ holds the “custodian of a thing” liable for injury resulting from the autonomous operation of that thing, unless the custodian establishes the absence of fault. The custodian is the person who, at the time the damage occurred, exercised supervision, direction and control over the thing.[5] Custody of a thing is different from mere physical possession. The analysis becomes more complex when control is assumed by a system. The vehicle’s “autonomous operation” is literal: its trajectory, braking and obstacle avoidance result from calculations over which the driver has no immediate control. If, at the time of the accident, the ADAS was activated in accordance with the manufacturer’s instructions and operated within its operational design domain, the driver or owner could plead that they did not exercise the effective control necessary to establish custody. However, it is not clear whether these considerations would be sufficient to convince a court that the driver or operator cannot be considered the custodian of the thing within the meaning of article 1465 of the CCQ. The use and maintenance of the system, as well as simply deciding to activate it, are factors that could weigh against such a position. Ultimately, making this determination may depend on the factual context, including the specific operating characteristics of the ADAS in the vehicle involved in the accident. For example, where a vehicle is operated using a Level 1 ADAS (basic assistance in which the vehicle controls either speed or steering) the owner is more likely to be considered its custodian than if the vehicle is operated using a Level 5 ADAS (full vehicle automation requiring no human intervention).
Article 1468 of the CCQ regarding safety defects, along with the legal warranties of quality provided for by the CCQ[6] and the Consumer Protection Act[7] (the “CPA”), provide an alternative basis for liability, such that a manufacturer, distributor or supplier of “a movable thing” may be held liable for injury caused to a third party due to any safety defect in the thing as well as any latent defects affecting it. To do so, however, the claimant will bear the burden of proving that the accident was caused by a failure in the vehicle itself or by misleading information regarding the capabilities of the ADAS, rather than by driver error, a failure to properly monitor the vehicle’s operation, road hazards (e.g., debris on the roadway), or the fault of a third party. Where liability is alleged in connection with a failure of the ADAS, it may be difficult to establish (i) that such a failure occurred and (ii) a causal connection between the failure and the collision. Doing so will generally require presenting expert evidence regarding the precise cause of the accident.
This evidence may also require access to vehicle data (ADAS logs, activation status, takeover events, software versions, updates and sensor data). Note that section 39.4 of the CPA, introduced in 2023, provides for the manufacturer’s obligation to grant access to vehicle data to the vehicle owner, long-term lessee, their mandatary (agent), or other persons prescribed by regulation, for diagnostic, maintenance or repair purposes. Moreover, the Autonomous Bus and Minibus Pilot Project initiated in 2018 provided that, in the event of an accident, offence or incident involving such vehicles, the collection of data on the automated driving system and information on the driver was permitted to determine the causes of the event. Although the pilot project ended in 2023, it is possible, and even likely, that a similar right will be incorporated into the Highway Safety Code (the “HSC”) or its regulations if Québec decides to authorize the operation of autonomous vehicles on its roads.
Pilot Projects: Section 633.1 HSC
As discussed in our previous bulletin, the use of CAVs remains strictly regulated in Québec. Level 4 and 5 vehicles may not operate outside an authorized pilot project, and a Level 3 vehicle may only be operated outside a pilot project if it is approved for sale in Canada. According to the SAAQ, no autonomous vehicles are currently available for sale or in operation in Québec. Section 633.1 of the Highway Safety Code[8] empowers the Minister to establish, by order, the rules applicable to pilot projects and, where necessary, to allow pilot projects to depart from certain provisions of the HSC. The maximum term is five years and may be extended by up to two years.
The financial mechanism provided for in this section deserves particular attention: to date, it is the only explicit legislative response in Québec to the shift in risk from drivers to manufacturers. In such pilot projects, the Minister may, among other things, set the minimum amount of liability insurance for property damage and require the manufacturer or distributor to reimburse the SAAQ for any compensation it is required to pay for bodily injuries. The Autonomous Bus and Minibus Pilot Project, adopted in August 2018, illustrated this mechanism by providing a framework for autonomous shuttles in Candiac and on Plaza St-Hubert in Montréal.
This legislative response therefore remains limited to ministerial orders adopted on a project-by-project basis. It does not reform the regime applicable to property damage: outside a pilot project, claims against a manufacturer or distributor must still be pursued under the ordinary rules of civil liability, including article 1468 CCQ, which entails the evidentiary challenges previously discussed.
Takeaways
Given the absence of specific rules governing these technologies and their distinct characteristics, Québec’s civil liability regime contains significant gaps when applied to CAVs. The AIA continues to effectively protect victims of bodily injury. Property damage, on the other hand, relies on a combination of rules set out in the AIA, the DCA, and the ordinary rules of civil liability, which were not designed to distinguish between human error, the vehicle’s autonomous operation, and a safety defect in an ADAS. The level of control exercised by the ADAS over the vehicle is likely to give rise to new questions regarding the responsibilities of drivers, manufacturers and autonomous driving software developers, particularly in relation to the concept of the “custodian” of a thing under article 1465 of the CCQ.
For companies operating or planning to operate CAV fleets in Québec, these uncertainties are not merely theoretical: they will determine who ultimately bears the cost of any accident. Access to vehicle data, the careful drafting of information for drivers regarding the system’s capabilities and the appropriate measures to guard against the risks associated with its use, the review of software and cyber exclusions in commercial insurance policies, and the monitoring of orders issued under section 633.1 of the HSC are all measures that should be implemented without delay, each requiring an approach tailored to the specific technology used, the type of fleet and the operating model.
Our insurance and liability law team assists manufacturers, operators and insurers in assessing these risks and negotiating the required coverage. Please do not hesitate to contact us to review your exposure before any upcoming insurance renewals or before launching new CAV projects in Québec.
As part of our series on CAVs, we will continue to monitor developments in this area. Our next article will focus on the insurance market’s response.
