Third-Party Liability Insurance
Third-party liability insurance is the portion of a home or auto insurance policy that covers claims resulting from bodily injury to another person or property damage to another person’s property. Sometimes referred to as legal liability coverage, it covers legal fees, lawsuit settlements, court fees, and any other associated legal expenses, such as lost income, medical expenses, or travel expenses arising from a lawsuit.
Why do I need third party liability insurance?
Accidents happen sometimes, even if you take all the proper precautions. Third-party accidents are exactly what liability coverage covers you for. If an accident results in serious injury or property damage, it could lead to a lawsuit and potentially serious financial implications for you, your family, or your business.
The costs of a lawsuit include things like court and legal expenses to settlement fees. But with third-party liability insurance coverage, you won’t have to pay these costs alone for a covered incident. This is one of the main benefits of third-party liability insurance.
How does third party liability coverage work?
How it works depends on the type of policy it’s included with. If you get into an car accident that injures someone and they file a claim against you, it’s the third-party liability section of your car insurance policy that will protect you.
If a guest visits your home and injures themselves on your icy steps, third-party liability coverage on your homeowner’s policy will come in handy. Just remember that third-party liability insurance is a type of coverage that you must add to your respective insurance policies in order to benefit from it.
How much third-party liability coverage do I need?
Depending on the type of insurance policy you wish to purchase, there may be minimum amounts of third-party liability coverage you are legally required to buy. These amounts will vary depending on the province you live in, so speak with an insurance broker who can help you find a policy that both meets your needs and complies with any mandatory coverage requirements in your province.
Many home and car insurance policies require a minimum of between $200,000 and $1,000,000 in third-party liability insurance. But if a claim is awarded that exceeds the amount of coverage in your policy, you will be responsible for paying the remainder out of pocket, so it’s crucial to ensure you have adequate coverage.
Choosing less coverage because it’s cheaper isn’t always the wisest decision and could end up costing you more money if an expensive accident occur. You can increase your liability limits, so you should speak with your insurance broker for guidance.
When it comes to home insurance, factors that might necessitate a greater amount of third-party liability coverage include if you operate a business out of your home, if your home has a swimming pool, or if you have an aggressive pet.
Meanwhile, considerations that relate to car insurance include if you frequently drive on major highways or at night, if you spend an above-average amount of time on the road (for example, if you drive as part of your job), if you frequently drive outside of Canada (in the U.S.), or if you often drive in hazardous conditions. If any of these circumstances ring true, it might be worth increasing your third-party liability coverage limit.
In some cases, having a higher third-party liability limit doesn’t necessarily cost significantly more money. Therefore, it’s certainly worth looking into if you have reason to believe you are at a higher risk of an accident.
The brokers and CSRs at DPM Insurance Group can help walk you through the various third-party liability coverage options available to you so that you can find one that suits your lifestyle and budget.
When else might third-party liability coverage come in handy?
At this point, you may be thinking that third-party liability coverage is only applicable in the event of a lawsuit, but this isn’t always the case. You don’t necessarily need to face a lawsuit to be eligible for third-party liability coverage.
If you’re responsible for injuring someone else or damaging their property, your insurance provider can seek restitution on your behalf without you being sued. Policyholders can choose to include coverage for voluntary payments in their policies.
So, if you find yourself responsible for an accident, even if the victim does not file a lawsuit against you, it can still be worthwhile to get in touch with your insurance company.
Contact DPM Insurance Group
If you have questions about how third-party liability coverage can protect you, how much to include with your policy, or the mandatory coverage requirements in Ontario, get in touch with one of the brokers or CSRs at DPM. Click here to find the office most convenient for you: https://dpmins.com/locations/