Understand liability auto insurance

Published: September 28, 2015

Updated: May 15, 2018



You have probably heard of liability auto insurance before; it is the main type of coverage that drivers get and in fact it is a mandatory policy benefit. All major auto insurance providers in Ontario and Canada offer liability coverage in their basic policies, and not having this kind of coverage is actually against the law.

Liability coverage means that you will be covered after an auto accident even if you were the party at fault, and as the name suggests you will have insurance protection for your liability as the cause of an accident. Liability auto insurance will help you pay for any damage you have caused to someone else’s property (car, home, other) or to other people physically.

There are different category limits for liability coverage within a policy. Each of these limits is a pre-determined amount that an insurance company will pay out when a policy holder is at fault. If any claim goes over the limit, the policy holder will have to make up the difference. For example, if you cause an accident that requires $65,000 in medical care and your accident wide limit is $80,000, you will be covered without any extra expense. However, if your limit is only $50,000 then you would have to make up the outstanding $15,000 to cover the costs of covering the accident.

Per person bodily injury liability limit – This is the limit your insurer agrees to pay for each person who is injured from an accident you caused.

Property damage liability limit – The insurer will pay up to this pre-determined amount for any property damage you have caused in an auto accident.

Accident wide bodily injury limit – This limit will be the amount an insurance provider is willing to pay out to cover an entire accident, including medical expenses for numerous people.

While it is worrying to think that you may find yourself in a situation where your liability limits do not cover you entirely, most insurance companies provide robust policies that are adequate in the majority of cases. For example, in Ontario it is mandatory for drivers to have minimum liability auto insurance of at least $200,000 and as such insurance companies must abide and offer at least this amount.

It is important that liability coverage is strictly for the damage you cause to other parties, be it physically or to property. It does not offer coverage for you in the event of a collision or personal injury, so you need to take out other benefits that specialize in this type of coverage within your policy.