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Written By Joel Kranc

Contributing writer

Updated

What is third-party liability insurance? 

Third-party liability car insurance covers losses incurred due to your actions. 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 bodily injury, property damage, and any legal expenses you may incur.

Most importantly, third-party car insurance is mandatory across all provinces in Canada. You must have it to drive a car legally. 

What does third-party liability insurance cover? 

Standard third-party liability 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 doesn’t third-party liability insurance cover?  

It won't cover damage to your vehicle when you are at fault. However, insurance is available for this scenario in the form of collision coverage — but you have to pay extra. 

Third-party liability also won't help pay for any injuries you sustain. Instead, the accident benefits portion of your policy covers this. Accident benefits are already part of most provinces' standard auto insurance policies.

Third-party liability car insurance requirements across Canada

Province/territory TPL requirements Details
British Columbia $200,000 min Payment for property damage capped at $20,000
Manitoba $200,000 min Payment for property damage capped at $20,000
New Brunswick $200,000 min Payment for property damage capped at $20,000
Newfoundland $200,000 min Payment for property damage capped at $20,000
Nova Scotia $500,000 min N/A
Northwest Territories $200,000 min Payment for property damage capped at $10,000
Nunavut $200,000 min Payment for property damage capped at $10,000
PEI $200,000 min Payment for property damage capped at $10,000
Quebec $50,000 min N/A
Saskatchewan $200,000 min Payment for property damage capped at $10,000
Yukon $200,000 min Payment for property damage capped at $10,000
Alberta $200,000 min If a claim for damages exceeds this amount, payment for property damage is capped at $10,000.
Ontario $200,000 min If a claim for damages exceeds this amount, payment for damages will be capped at $10,000 and DCPD applies.

Physical damage covered by third-party liability 

Third-party liability insurance policy offers protection against the expenses associated with damage or injury suffered by someone other than yourself. Some examples of accidents a third-party liability car insurance policy will cover are: 

  • Knocking over a neighbour’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 caused. 
  • Injuring the driver of another car in a collision you caused. 

How much third-party liability insurance coverage do I need? 

Most provinces (except Nova Scotia and Quebec) have a minimum third-party liability insurance requirement of $200,000. Therefore, any adequately insured driver will be insured for the minimum.

However, the cost of liabilities often exceeds $200,000. That's why drivers are recommended to opt for the $1 to $2 million range of coverage. It provides a more significant safety net for unforeseen circumstances and cushions any financial hardship you may incur if your basic coverage is limited.

Third-party liability is mandatory in all provinces, although minimum coverages may vary. There's no circumstance in which liability coverage isn't needed. As a driver, you must protect yourself from liability in all cases should an accident occur.

Most recent third-party liability quotes

Recent Auto Insurance Quote from CALEDONIA, ONTARIO
Male, Age 30
2015 MAZDA MAZDA3 GS SKY 4DR
April 18, 2024
Cheapest Quote
$ 332 / month
$3,980 / year
Average Quote
$ 433 / month
$5,192 / year
Savings
$ 101 / month
$1,212 / year
or
23.34 %
Recent Auto Insurance Quote from KITCHENER, ONTARIO
Male, Age 25
2018 HONDA CIVIC LX 4DR
April 18, 2024
Cheapest Quote
$ 498 / month
$5,975 / year
Average Quote
$ 659 / month
$7,910 / year
Savings
$ 161 / month
$1,935 / year
or
24.46 %
Recent Auto Insurance Quote from NORTH YORK, ONTARIO
Male, Age 47
2018 HYUNDAI ACCENT GLS 5DR
April 18, 2024
Cheapest Quote
$ 324 / month
$3,886 / year
Average Quote
$ 435 / month
$5,223 / year
Savings
$ 111 / month
$1,337 / year
or
25.60 %
Auto insurance quotes are compared from CAA, Coachman Insurance Company, Echelon Insurance, Economical Insurance, Gore Mutual, Onlia Insurance, Pafco, Pembridge, SGI, Travelers, Zenith Insurance Company

What people say about our quotes

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How to get a third-party liability car insurance quote on RATESDOTCA

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How to get the cheapest third-party liability insurance

There are a lot of tactics you can use to lower your car insurance premiums, but some make more of a difference than others. Here are the most impactful moves you can make to lower your rate.

Buy a cheaper car

The vehicle you choose has an outsized impact on how much you pay for insurance. It's almost as consequential as driver behaviour. 

First, choose a car that's less likely to be stolen. The Insurance Bureau of Canada publishes a list annually of the most frequently stolen cars. While thieves often target luxury car brands like Lexus, middle-of-the-road brands like Toyota and Ford make up a significant portion of thefts.

Also, remember that a fully optioned car will cost more to repair or replace and, therefore, to insure. On the other hand, a vehicle with a basic trim will have lower potential claims costs and will be less expensive to insure.

Lastly, avoid financing a car. Loan providers and lessors make you purchase comprehensive insurance coverage for the vehicle. It ensures the lender doesn't lose their investment if you default on your loan.

Keep a clean driving and insurance record

This tip doesn't result in immediate savings, but it's up there with buying a cheaper car to keep your premiums low.

Don't rack up traffic ticketsavoid making insurance claims, and always pay your premium on time. Suppose you can maintain a spotless continuous insurance history over the years. In that case, insurance companies will eventually offer you their preferred (lowest) rates.

To protect your reputation as a great driver, consider purchasing an endorsement that covers you from a rate increase on your first at-fault accident. A reputation for good driving behaviour takes time and effort to establish. Still, it will significantly impact your insurance rates in the long run.

Pass on optional coverages

Your car loses value over time. At some point, your car will depreciate to the point where it would be cheaper to replace rather than continue paying for collision and comprehensive insurance. Vehicles five years old or more typically don't need collision or comprehensive insurance.

Increase your deductible

The deductible is how much you agree to pay out of pocket for damages before your insurance company pays out your benefit. If you offer to shoulder more of the expense, your insurance company will lower your premium.

Try usage-based insurance

If you drive 12,000 kilometres a year or less, consider getting a usage-based insurance policy. When you apply for a car insurance policy, insurance companies ask you to predict the number of kilometres you expect to log over the coming year. This leads some people to inflate the number to stay on the safe side. A usage-based policy offers more flexibility than a traditional policy. You pay for every 1,000 kilometres you drive, usually up to 12,000 kilometres. Essentially, you err on the side of being a low-mileage driver, reap a cheaper premium, and pay the difference on the off chance you go over your allotment of kilometres.

Sign up for telematics

Telematics refers to insurance technology that monitors your driving habits. Insurance companies give you a compact sensor you install in your car and pair it with an app.

Together, the devices can monitor your speed, how hard you brake, and the distance travelled. If the device reflects cautious driving habits, you'll receive a discount at renewal — up to 20% in some cases. Some insurance companies offer an initial discount for enrolling in the program.

Telematics programs are available in Ontario, Nova Scotia, New Brunswick, Quebec, and Alberta. One word of caution: insurance companies can use the information to raise your rates in Ontario.

Compare rates

Be sure to compare rates. Car insurance companies in provinces with private insurance markets don't charge the same for coverage. The price of your car insurance depends on the insurer you choose. In 2021, RATESDOTCA drivers saved an average of $772 and $736 annually in Ontario and Alberta, respectively. Both the Auto Insurance Rate Board of Alberta and the Financial Services Regulatory Authority of Ontario recommend shopping around to find a lower rate.

However, be wary of switching insurance companies midway through your term, as this will likely result in a premium increase. Waiting until your renewal period is recommended to avoid cancellation penalties.

Other tactics worth trying:

  • Pay for your annual coverage upfront.
  • Reduce your dependency on your car: the more kilometres you log, the more you'll pay for insurance, so try to incorporate other modes of transportation into your lifestyle, like walking, biking and public transit.
  • Take a ministry-approved driver training program. Check with your insurance provider about courses that could earn you a discount on your coverage.
  • Apply for as many discounts as you can. Examples of typical insurance discounts include:
  • Winter tire discount
  • Alumni and employer discounts
  • Savings for students who maintain a certain GPA
  • Bundling discount (insure multiple cars with the same provider or combine home and auto)

How do third-party liability car insurance claims work? 

If you were at fault for an accident and caused injury or property damage to a third party, your insurer will review the costs to compensate them and offer a settlement. The third party can agree to the terms, seek legal advice or file a lawsuit. Your insurance will cover expenses up to your policy limit. 

In provinces with no-fault insurance systems, everyone involved will deal with their insurance provider for any claims. You won't need to communicate with the third party's insurance company. 

Frequently asked questions about third-party liability car insurance 

Have more questions about third-party liability insurance? We’ve got answers. 

How can I find the cheapest third-party liability car insurance? 

One of the best ways to find the cheapest third-party liability car insurance coverage is through comparison sites like RATESDOTCA. With a few clicks and some information about your driving needs, we can provide quick quote comparisons to ensure you can choose the cheapest rates available. 

Which company has the cheapest third-party liability car insurance in Canada? 

The price you pay for third-party liability car insurance in Canada will depend on many variables. These include where you live, how much you drive, your province's mandatory requirements and more.  

By comparing rates on sites like RATESDOTCA, you’ll see a comparison of quotes from which you can choose. Comparison shopping on RATESDOTCA provides fast and accurate information and ensures you pay the cheapest amount for the coverage you need. 

Do I need third-party liability insurance to rent a car? 

The first thing to do when renting a car (or even before) is to speak with your provider. Your own insurance policy may include liability for rental car insurance, which transfers all your existing coverage to a rental car. However, suppose you don't have car insurance. In that case, third-party liability is an essential and money-saving addition to your rental agreement if you injure someone or damage their property. 

*Shoppers in Ontario who obtained an auto insurance quote on RATESDOTCA and transacted via our contact centre from January to December 2022 saved an average amount of $800. The average savings amount represents the difference between the shoppers’ average lowest quoted premium and the average of the second and third lowest quoted premiums generated by RATESDOTCA.

Joel Kranc ,
Writer

Joel Kranc is a freelance writer and content provider who has worked with RATESDOTCA since 2019. He holds an MA in political science from the University of Toronto and a film certificate from New York University.

He has been published in and worked for such companies as CNN, Rogers Media, Institutional Investor Magazine, The Globe and Mail, Infrastructure Investor, BenefitsPRO Magazine, Global Finance Magazine, With Intelligence, the CPP Investment Board, Hospitals of Ontario Pension Plan, and many more financial services and industry publications.

He is the author of "Retirement Planning in 8 Easy Steps," which, when released in 2015, was No. 11 on the Publisher's Weekly US Bestseller List for Business and Finance, beating out Mark Cuban's "How to Win at the Sport of Business."

Education
  • Master's of Political Science, University of Toronto
Featured in
  • Benefits Canada
  • Institutional Investor
  • Plan Sponsor Magazine
  • Global Finance Magazine
  • Infrastructure Investor
  • Private Equity Investor
  • The Globe and Mail
  • Fund Directions Newsletter
  • BenefitsPRO
  • HR Professional
  • Advisor's Edge
  • Institutional Investor
  • Employee Benefit Advisor
  • Investing in Infrastructure Magazine (i3)

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