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Why $1M Liability Coverage Is Not Enough These Days

$2M Liability should be the new standard

Ontario has compulsory automobile insurance; every motor vehicle registered in the province must be insured. One of the required coverages is third-party liability coverage, which covers the policy holder for non-vehicle property damage suffered by a third party, and for damages suffered by a third party if they are injured or killed in a car accident. By law, the minimum amount of third-party liability coverage is $200,000.00.

That said, the industry standard automobile insurance policy provides for $1,000,000.00, rather than $200,000.00, in coverage for third-party liability; most drivers in Ontario have $1,000,000.00 in coverage. Even though this is the industry standard, there are a number of reasons why Ontario drivers should speak to their broker or insurance agent about increasing their third-party liability coverage to $2,000,000.00. The two most significant reasons:

  1. $1,000,000.00 in Coverage is Inadequate for Serious Injuries (or Where There are Multiple Injured Persons):  while most third-party liability claims are under $1,000,000.00, if, unfortunately, you are found responsible for an accident in which a person is seriously injured, or where a number of people are injured in the same accident (because in such cases, they must share the same third-party liability limit) the damages can exceed $1,000,000.00, putting you at risk to pay damages over and above the policy limits. In such cases, particularly where you have notable assets or a good job, injured persons can choose to pursue you personally for amounts above the policy limits.
  2. It Can Help Protect You From Uninsured or Underinsured Drivers: most auto insurance policies include an OPCF 44R “Underinsurance” coverage, which applies where a driver responsible for a collision has no, or inadequate, third-party liability insurance. Typically, the value of your OPCF 44R is linked to your own third-party liability coverage amount. So, for instance, if you have $2,000,000.00 in third-party liability coverage, you would also have $2,000,000.00 in underinsurance coverage. If, then, you were involved in a serious accident in which the at-fault driver had only $1,000,000.00 in third-party liability coverage, you would not only have access to that $1,000,000.00, but if your damages were in excess of that $1,000,000.00, access to the difference of $1,000,000.00 between their third-party liability coverage limit and your OPCF 44R underinsurance coverage limit. In cases of serious injury, where you may suffer a large income loss, or need significant care or treatment, those extra funds can be an incredible help.

In most cases, the cost of increasing your third-party liability coverage to $2,000,000.00 is relatively modest.

Ontario drivers should speak to their brokers or insurance agents about the costs and benefits of increasing that coverage to $2,000,000.00 to ensure their auto insurance is providing the protection it should.


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