Why $1M Liability Coverage Is Not Enough These Days

The information in this blog post has not been updated to accurately reflect the current trends and information related to this topic. Should you require legal advice, please contact a personal injury lawyer or certified professional for additional information and resources. 

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.