What is Third-Party Liability Car Insurance?

January 8, 2024

In Canada, third-party liability coverage as part of your car insurance is mandatory. You can’t legally drive without it.

What exactly is it, and how does third-party liability insurance protect you as a driver?

What is third-party liability insurance?

Third-party liability insurance is a type of insurance coverage that protects you as the policyholder against financial losses or legal liabilities arising from claims made by a third party.

When you get into a car accident and are found to be at fault, the other driver would count as a third party when filing an insurance claim against you to cover any bodily injury or property damage you caused in the accident.

Did you know? The term third-party term applies to general liability Insurance as well:

Third-party liability insurance can also refer to general liability insurance for businesses. This type of insurance protects businesses from financial losses resulting from claims made by third parties for bodily injury or property damage caused by the business's operations, products, or services. Learn more.

Overall, third-party liability insurance protects individuals and businesses from the potentially high costs associated with legal claims and compensation for injuries or damage caused to others. This kind of insurance will help you avoid unexpected and hefty fees in an emergency.

Here’s what third-party liability in your car insurance typically covers in Canada:

Bodily injury coverage

If you are at fault in an accident and someone else (a third party) is injured, your insurance will cover the medical expenses, rehabilitation costs, and, if necessary, the legal fees associated with any bodily injury claims filed against you. This is standard.

Property damage coverage

If you cause damage to someone else's property in an accident, this helps cover the costs of repairing or replacing the damaged property, such as another person's vehicle, a fence, a building, or anything else that was hit in the collision.

Legal expenses

Third-party liability insurance covers legal expenses if you are sued by the other party involved in the accident, including legal representation and court costs.

Coverage limits

Third-party liability coverage comes with limits, so talk to an insurance professional and pick a coverage limit that fits your needs.

In Canada, coverage limits are expressed as a combination of two amounts, such as $1 million or $2 million. The first number represents the maximum coverage for bodily injury per person, and the second number represents the maximum coverage for bodily injury per accident.

Remember: Snow tires are mandatory in some provinces and recommended in all of them! Winterize your vehicle properly to avoid any pauses or problems in your auto insurance coverage in case of an accident.

Understanding your specific auto insurance plan can be complicated, so don’t hesitate to speak to your Western Financial Group car insurance expert. It’s better to understand the fine print and make sure you have the right coverage for your needs before you experience an accident. Stay safe out there!