Liability Insurance in Canada


If you are found at-fault in a motor vehicle accident then you may be legally responsible for the replacement or repair of another person’s property. You may also be responsible for the other driver’s medical costs if they are injured. Third-party liability insurance covers you against claims made by any other party.

The things that are not covered by third-party liability insurance include damage and loss to other (non-vehicle) property. One example would be a home. It does not cover the property that is inside your vehicle. Third-party liability coverage will not protect equipment that is attached to your vehicle, if it is stolen at a work site. That last exclusion is relevant to people that are working in industries such as construction and landscaping.

How Much Third-Party Liability Insurance Should I Carry?

The mandatory amount of coverage required by law is different in each province. In Ontario and British Columbia you must purchase at least $200,000 in coverage, whereas in Nova Scotia you must purchase at least $500,000 in coverage. It is often suggested that you increase your coverage to $1 or $2 million though. Your insurance agent should be able to help you decide on a coverage amount that works for you.

What Happens if I Don’t Carry Insurance?

In Ontario, if you drive without insurance you may face a fine of between $5,000 and $25,000 on your first conviction. If you are convicted a second time you will have to pay a fine of somewhere between $10,000 and $50,000. In recent years, the number of Albertan drivers not carrying insurance has seen an increase. According to the Insurance Bureau of Canada, 1 in 10 drivers in the province are uninsured.

Further Reading:

CBC News – Growing number of Albertans driving with no insurance

Extended Third-Party Liability Coverage

If you are found to be at-fault in a serious vehicle accident then the court could order you to pay significantly more than the mandatory third party liability coverage in your province. This is why you should consider extended coverage. If you live in British Columbia then you can purchase as much as $5 million in liability coverage. How much should you purchase? It really depends on your comfort level and specific circumstances. In many provinces you can insure commercial vehicles for up to $10 million.