Third-Party Liability Insurance in Canada

If you have a car or home insurance policy, you've likely seen the term third-party liability. But what does it mean? And more importantly, what does it cover? We'll answer some common questions you may have to help you better understand what and how third-party liability insurance works in Canada.

What is third-party liability insurance?

Third-party liability insurance is a type of coverage that financially protects you if you're considered responsible for damages or injury to another person or their property.

This type of coverage is available for both home and car insurance. However, having third-party liability coverage on the vehicle(s) under your car insurance policy is mandatory in order to drive in Canada.

What does third-party liability insurance cover?

Third-party liability covers (up to the specified limit on your policy), but is not limited to:

  • Repair costs to damaged vehicles/property
  • Legal fees
  • Settlement costs
  • Medical costs

And since it can cover multiple situations, here are some examples where third-party liability will kick in:

Example 1: Person A loses control of their vehicle and crashes into their neighbour's fence.

Example 2: Person A is attempting to turn right at an intersection, fails to check their blind spot and accidentally hits a cyclist.

Example 3: Person A's tires lose traction on an icy road, their car slips and accidentally hits the back of Person B's car.

Why is it important to have third-party liability insurance?

Because accidents can happen at any time to anybody. It's important to ensure you not only have the proper coverage, but the right amount of coverage to protect yourself if you're held responsible for damages or injuries. Let's face it, medical costs, legal fees and everything associated post-incident can get expensive. But, by having the right amount of third-party liability coverage, you can avoid the potential risk of paying for these expenses out of pocket.

Is third-party liability insurance included in my auto policy?

Yes, it is. As mentioned above, third-party liability insurance is mandatory to drive a vehicle in Canada. However, the minimum amount of coverage you're required to have varies by province/territory. To find out the mandatory minimum coverage you're required to have for your vehicle, check out the Insurance Bureau of Canada's summary of mandatory coverages for details specific to your province.

How much third-party liability coverage should I have?

Although each province/territory has their own minimum amount of coverage you're required to have, it's important that you discuss your own auto insurance needs with your insurer. Since the unexpected can happen to anyone, your insurer can help you determine whether your third-party liability coverage limit is sufficient, or if you require more. For a general idea, many insurers including TD Insurance recommends that you have a liability limit of at least $1,000,000. Accidents can cause vehicle damage, property damage, injuries and even death, so you'll want to make sure that you have more than enough protection to cover all necessary costs. If you're an existing TD Insurance customer, you can review and/or increase your liability coverage at any time by logging into MyInsurance. Or, if you're new to TD Insurance, you can get a quote and check out your liability coverage options, and the costs associated with them.

Accidents happen. But third-party liability coverage can help protect you if an accident takes a turn for the worst. Insure yourself with enough third-party liability coverage so you can go about your day-to-day confidently knowing you're properly protected.

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The content on this page is for general information purposes only and does not constitute legal advice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.

In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence. Please speak to an Advisor or consult your policy wordings for further details.