Traffic accidents often happen in the blink of an eye and they can happen to anyone, even the most experienced and careful drivers. The worst-case scenarios, where another driver is seriously injured or killed, can lead to lengthy legal battles with many back and forth with insurance companies. That’s why third-party liability coverage is such an important part of auto insurance.

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What does civil liability mean?

In Canada, liability basically means that an individual or a company can be held responsible for an act in the eyes of the law. There are different standards of liability ranging from “intent” to “negligence”. It is important to know that liability means that one party can be held liable to varying degrees when another party suffers damage.

In the context of insurance, third party refers to someone who is not part of a contract between the first party (the insured person) and the second party (the insurance company). So in auto insurance, civil liability refers to coverage used when a driver is at fault in an accident involving a third party who was injured or killed or whose property was damaged.

What is third-party liability insurance?

Third party liability insurance covers drivers if they are at fault in an accident and the other party is injured or killed. It also covers damage to the other person’s property and the associated repair costs. It’s a mandatory part of auto insurance, which Canadian drivers are required by law to obtain before hitting the road.

As such, civil liability coverage works in tandem with other elements of your policy to provide complete protection against a variety of claims. These other components include:

Accident Benefits: Compulsory coverage that provides you and anyone on your policy with medical coverage (beyond what public health care already provides) if you have an accident resulting in injury. Uninsured car insurance: Another compulsory cover that protects you if you are involved in an accident with an uninsured driver or who leaves the scene of the accident (drive through).

In Canada, auto insurance rules can vary from province to province, but there are similarities when it comes to mandatory coverage. Each province and territory requires a minimum of $200,000 in civil liability coverage, except Quebec, where the minimum is $50,000, and for Nova Scotia, where it is $500,000. However, a single accident can easily exceed the minimum coverage, so many drivers choose to pay $1 million to $5 million in coverage.

What does the third-party liability insurance cover?

Third-party liability insurance provides cover when you are responsible or at fault for an accident that results in property damage, personal injury or death. Coverage is assessed and applied according to your policy agreement, but generally covers the following types of accidents:

Damage to neighbor property Damage to company equipment or signage Injury or death as a result of an accident with another driver Injury or death as a result of a collision with a cyclist or pedestrian

Third-party liability insurance does not cover you if you yourself were at fault in an accident and suffered injury or damage to your own property. To be covered for that, you need accident insurance and collision coverage.

This post What you need to know about third-party liability insurance in Canada

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