What Does Third-Party Liability Mean?

The third party refers to someone who is not a party to a contract between the first and second parties. The first party would be you, the insured, and the second party is your insurance company. Third-party liability refers to coverage you can use when you are at fault in an accident. This accident involves a third party who is hurt, who dies, or whose property suffers damages.

Why is Third-Party Liability Coverage So Important?

Unfortunately, accidents often result in lawsuits that can have serious financial consequences for you. Lawsuits can be expensive, but liability coverage ensures you won’t get stuck paying out of your pocket. For a list of some possible scenarios involving third-party accidents, click here.

Do I Need Third-Party Liability Insurance to Rent a Car?

If you have your insurance policy, it will usually (but not always) include rental car insurance. All of your existing coverage will transfer to the rental car. If you don’t have car insurance, third-party liability is an essential add-on to your rental agreement. This is if you injure someone or damage their property.

Does the Coverage on My Credit Card Cover Me For TPL?

No. Your credit card only protects the car you’re driving.

How Do Third-Party Car Accident Claims Work?

If you cause injuries to someone or damage to property as a result of an accident, they can immediately open a claim. They’ll begin seeking medical treatment and start their repairs. Because Ontario is a no-fault province, everyone will deal with their insurance provider for any claims. Depending on your provider, you may need to pay out-of-pocket to cover all costs. In some cases, the treatment or repair facility can submit expenses directly to your provider. Once the repairs are complete and the injuries have healed, the claim can be closed. However, your car insurance company will review the case and offer them a settlement. If those with injuries disagree on the amount, they can seek legal advice. Additionally, they can open a lawsuit for pain and suffering against you in some provinces.

What Does Third-Party Liability Insurance Not Cover?

1. Damage to Your Vehicle

Third-party liability (TPL) coverage only protects you if you damage someone else’s property. Additionally, it does not pay for repairs to your car if you’re at fault in an accident. TPL will also cover the cost of their vehicle repairs, but any damage to your car is your responsibility unless you have optional collision coverage.

2. Injuries to Your Passengers

TLP coverage also doesn’t apply to injuries you or your passengers sustain in an accident while in the vehicle. Even if you’re at fault, your medical bills, rehabilitation, and lost wages are instead covered under the Accident Benefits portion of your auto insurance policy—a separate mandatory coverage in Ontario.

If I Have Third-Party Liability Coverage in my Home or Tenant Insurance Policy, Does It Also Cover Me When I’m Driving?

No. When you’re operating a vehicle, liability for injuries or damage is not covered by your home or tenant insurance policy. You’ll need to carry enough liability coverage on your car insurance policy to protect you in case of an accident. If you feel that your coverage is inadequate, speak to your isure broker about increasing coverage.

When You Rent a Car, Does Your Insurance Cover You?

The standard minimum mandate for third-party car insurance is $200,000 in most provinces. Many insurance companies offer coverage for third-party damages and injuries while operating a rental car. This is done through an endorsement that you must select on your policy. In Ontario, additional coverage for renting a car can be found in the OPCF 27. It’s essential to check the inclusions in your policy. If your coverage doesn’t extend to car rentals, you may want to consider purchasing additional coverage through the rental company. Additionally, some credit cards offer collision coverage, but you will need to verify this before renting.

I Have An At-Fault Claim, Now What?

If you are in an at-fault accident, anyone who suffers from the damage of the accident can make a claim. This can be to seek repairs and/or medical treatment for injuries. You will need to provide your insurance details to the other party involved in the accident. Both parties should take photos and notes to record all of the details. This includes time, location, names, and contact information for everyone present at the accident. For more information on what to do in case of an accident regarding third-party liability coverage, click here.

What Happens If You Don’t Have Third-Party Liability Coverage?

It is illegal to drive in Canada without the minimum amount of third-party liability insurance. If you’re caught driving without insurance, you can face penalties, such as a fine and/or a licence suspension. And if you have an accident, the real costs of inadequate coverage can range from hundreds to millions of dollars. However, this will depend on the outcome, of course.

Luckily, today’s auto insurance quotes typically already include the minimum coverage requirements. Contact an isure broker today to discuss further!