Third Party Liability Car Insurance

Your car insurance can protect you in a number of situations. Accident benefits provide compensation for any medical/rehabilitation costs you have to pay for if you’ve been injured. Collision car insurance coverage covers the cost of repairs for any damage done to your vehicle in an accident, while comprehensive car insurance covers the cost of repairs for any damage inflicted on your car in other scenarios (bad weather, vandalism, etc.). In the end, the most important type of coverage in your policy will always be third-party liability insurance.

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What is Third-Party Liability Insurance?

Whereas general liability insurance is something people/businesses purchase to protect themselves in the event that the work they do could somehow result in a lawsuit, third-party liability insurance protects you when you’re at fault for a motor vehicle accident and someone makes a claim against you (or your car insurance company).

For example, if you accidentally rear-ended another car, and both injured the driver and damaged their car, the other driver could make a claim against you. If you found yourself in this situation, your third-party liability insurance would cover their medical costs, loss of wages (if applicable) and the cost of repair to their vehicle.

What is Covered by Third-Party Liability Insurance?

Taking from the example above, your third-party liability insurance covers:

  • medical costs required by anyone you’ve injured (including if those injuries are fatal),
  • repair costs to any vehicles you’ve damaged, and
  • repair costs to any property you’ve damaged.

What is NOT Covered by Third-Party Liability Insurance?

Third-party liability insurance doesn’t cover the cost of any injuries or damage you have personally suffered as a result of an accident you were at-fault for. For that, you would need accident benefits and collision coverage.

Is Third-Party Liability Insurance Mandatory?

Yes – in all provinces and territories in Canada, it is illegal to drive a car without third-party liability insurance.

How Much Third-Party Liability Insurance Do You Need?

The minimum amount of third-party liability insurance you have to purchase varies, but is $200,000 in most provinces. However, every insurance company will suggest you purchase additional coverage, as one accident could easily exceed the limits of your coverage – and you wouldn’t want to be held financially responsible for the difference. For that reason, most Canadians purchase $1-5 million of third-party liability insurance.

How Do Third-Party Car Accident Claims Work?

If you are in an accident and it was your fault, the people who suffered injuries/damages will open a claim right away, and begin seeking medical treatment and/or get their repairs started. Depending on which province they live in and what their own insurance coverage includes, they may have to cover the costs of everything with their personal funds (or through their insurance company) until they decide to close the claim (typically not until they feel everything has been done and they are healed). At this time, your car insurance company will review the case and offer them a settlement. If the person does not agree on the amount, they can seek legal advice and open a lawsuit.

How to Buy Third-Party Liability Insurance

When you’re ready to buy a new car insurance policy, you can do so in-person or over the phone, at a bank/credit union, insurance company or insurance brokerage (deals with more than one insurance company). If you haven’t already done so, we always suggest you start by comparing car insurance quotes online. is not affiliated or otherwise associated with Hub International Canada.