What Is Third-Party Liability Auto Insurance?
Third-party liability auto insurance provides financial protection if you are found legally responsible for injuring someone or damaging their property in an accident. While available for home and car insurance, it is mandatory for anyone who wants to legally drive a vehicle in Canada.
It functions with other elements of your car insurance policy, including the following:
- Accident benefits: Provides medical, rehabilitation, and income-replacement benefits regardless of who caused the accident.
- Uninsured auto insurance: Protects you if you are injured or your vehicle is damaged by an uninsured or unidentified driver, including many hit-and-run situations.
How It Works
Third-party car insurance kicks in under the following circumstances:
- Backing into private property accidentally
- Hitting a pedestrian or cyclist unintentionally
- Losing control of your vehicle due to a malfunction, bad weather, or other external factors
- Causing an accident with another car leading to severe injury or death
When someone opens a third-party liability claim against you, your policy will cover this claim up to an agreed limit.
How Much Does Third-Party Liability Coverage Cost?
The average cost of third-party liability coverage in Ontario is around $265 per year for a driver with a clean driving record.
What Third-Party Car Insurance Covers
Third-party car insurance provides financial coverage for the following:
- Repair costs for any vehicles damaged in the accident
- Repair costs for surrounding property damage
- Medical costs
- Legal fees and settlements for potential lawsuits
Some instances where you can use third-party car insurance include losing control of your vehicle and hitting another car or someone’s property.
What Doesn’t Third-Party Car Insurance Cover?
Third-party car insurance wouldn’t cover damages to your vehicle or injuries to yourself if you caused the accident. Injuries to you or your passengers are usually covered through accident benefits, while damage to your vehicle may require collision or DCPD coverage, depending on fault.
Do You Need Third-Party Car Insurance to Rent a Vehicle?
If you already have an existing policy, it will likely cover third-party liability on a rented vehicle. However, it might not cover collisions or other damage to the rental.
If you don’t have insurance, the rental company may request that you add third-party liability coverage to your rental agreement.
What if You Live in a No-Fault Province?
If you live in a no-fault province, each driver typically deals with their own insurer for certain claims, although fault is still determined. You may still sue the at-fault driver in certain circumstances, particularly for serious injuries. Learn more about no-fault insurance in Ontario.
How to Get Third-Party Liability Insurance
As with auto insurance, you must contact a broker or provider to apply for third-party liability coverage. You can quickly and easily compare insurance quotes online before picking your preferred company.
When selecting your policy, your insurance rates depend on age, driving history, vehicle, and even marital status. How much deductible you pay can also influence your insurance premiums.
How Much Third-Party Liability Insurance Does Ontario Require?
In Ontario, the minimum third-party liability coverage required is $200,000, although many drivers choose $1 million or $2 million for better protection.
If you live outside of Ontario, reference this table to get a better idea of how much third-party liability coverage you’ll need, from the lowest to the highest amount:
| Province | Min. coverage amount |
|---|---|
| Quebec | $50,000 |
| Alberta | $200,000 |
| Northwest Territories | $200,000 |
| Nunavut | $200,000 |
| Prince Edward Island | $200,000 |
| Saskatchewan | $200,000 |
| Yukon | $200,000 |
| British Columbia | $200,000 |
| Manitoba | $200,000 |
| New Brunswick | $200,000 |
| Newfoundland/Labrador | $200,000 |
| Nova Scotia | $500,000 |
How much third-party liability insurance costs is a different story. On average, insurance policies in Ontario cost between $600 and $1,600, which may vary according to any optional add-ons you might choose.
Increasing Third-Party Liability Insurance Limits
You can increase your third-party liability coverage if you want added protection on the road. In addition, a single accident can easily surpass $200,000, so growing your limit can be beneficial.
There are other reasons you might want to increase your insurance limits, including the following:
- Frequent carpooling
- Using your vehicle for commercial purposes
- Driving across the US and Canadian borders often
- Living in a metropolitan area where more accidents happen
Most Canadians purchase between $1 and $5 million, with the average recommended amount being $2 million.
Can You Drive Without Third-Party Car Insurance?
No, you cannot drive without third-party car insurance in Canada. If you have accident benefits and collision coverage, you may think you can get away with it, but car manufacturers will require it for anyone buying a new vehicle.
If you get into an accident and don’t have third-party car insurance, you’ll have to pay for any damage you cause personally. In addition, if caught driving without a valid third-party insurance policy, fines can reach several thousand dollars.
In some cases, you can also face permanent licence suspension, jail time of up to six months, and other no-licence penalties.
How to Make a Claim with Your Third-Party Liability Insurance Policy
If another driver hits your vehicle, you typically file a claim with your own insurance company, which will determine fault and apply the appropriate coverage.
- Report the incident. Once you’ve pulled over and ensured everyone in your vehicle is safe, you should report the car accident to the authorities. Don’t wait to call 911 – do it immediately.
- Gather as much information as possible. Ask for the other driver’s name, contact details, licence plate number, and insurance policy number. If you can, take photos and video evidence of the scene. Speak to witnesses and ask for their account of the incident. After speaking to the responding police officer, note their name and badge number, and request a copy of the police report.
- Call your insurance company. Even if you weren’t at fault, contacting your insurance company ensures you aren’t breaking policy rules. In addition, working with your insurance company can make the claims process smoother.
- File your claim. You can request that your insurance company facilitate the claims process. You’ll just have to provide the information you collected at the scene. If you choose to file the claim yourself, most insurance providers have an online claims portal where you can submit information.
- Receive your settlement. You’ll receive your payout or settlement offer if you win your third-party liability claim. You can negotiate a different cost if you believe the offer is too low. However, there’s no guarantee you’ll get a better offer afterward.
Tips for Saving Money on Third-Party Liability Insurance
While third-party liability insurance is necessary, paying for it can be costly. Remember these tips to lower insurance costs for a third-party liability policy.
Key Advice from MyChoice
- Think about raising your liability coverage above the minimum, because medical bills and legal claims from serious accidents can easily go over $200,000.
- When picking your coverage limits, consider how often you drive and where you go. This is especially important if you drive a lot, carpool, or travel between provinces or to other countries.
- Make sure you understand how third-party liability coverage fits with the rest of your auto policy, like accident benefits and uninsured automobile coverage, so you have full protection.