Insurance that protects the policyholder against claims from third parties for bodily injury or property damage that the policyholder is legally responsible for. Liability coverage pays for legal defence costs and any damages or settlements. It is a component of auto, home, and business insurance policies across Canada.
Understanding liability insurance is important for Canadian insurance consumers because it directly affects how your coverage works and what you can expect when you need to use your insurance. This is a foundational insurance concept that applies across multiple types of coverage and is worth understanding regardless of what insurance you carry.
If you have questions about how liability insurance applies to your specific insurance needs, speaking with a licensed insurance broker can help clarify your options and ensure you have the right level of protection.
Mandatory auto insurance coverage in Canada that pays for bodily injury and property damage you cause to other people in an at-fault accident. Minimum coverage limits vary by province, ranging from $200,000 to $500,000, but most brokers recommend at least $1 million or $2 million in coverage to adequately protect your assets.
Coverage that pays for injuries you cause to other people in an accident where you are at fault. This includes medical expenses, lost wages, pain and suffering, and legal defence costs. In Canada, minimum bodily injury liability limits vary by province, but most brokers recommend carrying higher limits for adequate protection.
An extra liability insurance policy that provides coverage beyond the limits of your existing auto, home, or business insurance. Umbrella policies typically offer $1 million to $5 million in additional protection and are relatively inexpensive for the amount of coverage they provide. They activate when the limits of your underlying policies are exhausted.
A licensed insurance broker can explain how liability insurance applies to your specific situation and help you find the right coverage.
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