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What is third-party liability car insurance?

Third-party liability car insurance covers you against losses incurred due to third-party damage claims when you have an at-fault accident. This includes damage to someone else’s property, bodily injury or death.

Why do I need third-party liability car insurance?

If you are involved in a car accident and found to be partially or totally at fault, third-party damages can be costly. Being at fault makes you liable for damages suffered by other people, including injuries and property damage. Third-party liability car insurance covers both you and your listed drivers from third-party claims.

Most importantly, third-party auto insurance is mandatory across all provinces in Canada. A vehicle must be protected by this coverage to legally be out on the road.

Ontario third-party liability car insurance requirements

In Ontario, it is a mandatory to have a minimum of $200,000 in third-party liability car insurance coverage. It is important to note that the majority of drivers prefer to choose a $1,000,000 third-party liability coverage over the required minimum as a necessary precaution against third-party claims. If third-party liability claims exceed your insurance coverage, you are personally responsible for the amount exceeding your coverage.

If the claim against you exceeds the coverage your policy provides, the victim(s) can sell your assets and garnish your wages to collect the amount.

Alberta third party liability car insurance requirements

In Alberta, the legal minimum for third-party liability car insurance coverage is $200,000. It is interesting to note that more than 98% of vehicles are insured for at least a $1,000,000 in third-party liability coverage.

This means the majority of drivers in Alberta believe in having a wider safety net against third-party accident claims, gaining greater protection in the event they are involved in an at-fault accident.

(Source: AIRB Alberta)

What does third-party liability car insurance cover?

A standard third-party liability car insurance policy covers:

  • Medical bills in case of injuries to a third party (including pedestrians, cyclists, and fatalities)
  • Repair costs to any damaged vehicles
  • Repairs or replacement of damaged property
  • Legal fees and lawsuits
  • Damages awarded to the injured parties

What type of damage is protected by third-party liability?

Essentially, a third-party liability insurance policy offers protection against the expenses associated with damage or injury suffered by someone other than yourself. This type of expense may be incurred in a wide variety of events. Some examples of accidents a third-party liability car insurance policy will cover are:

  • Knocking over a neighbor’s fence while reversing your vehicle.
  • Hitting a cyclist or pedestrian with your vehicle and injuring them.
  • Losing control of your car due to weather conditions and damaging someone’s property.
  • Damaging someone’s car in a collision you are deemed to be at fault for.

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