Car Insurance Liability Coverage: When You Can and Can't Remove It

There are several different types of car insurance available in Canada. Each type of car insurance serves a different purpose, but at the end of the day, they're all meant to financially protect you in some way, shape or form.

Some types of car insurance are optional, whereas other forms of insurance, like liability coverage insurance, are legally required (under most circumstances).

Today's post will focus on liability auto insurance for private passenger vehicles and recreational vehicles in Canada. We'll go over some of the reasons why it's important and why you sometimes can't remove it from your policy.

If you're currently looking for liability coverage insurance (or any other type of insurance), you should consider contacting an online insurance brokerage, like our team at Surex. Online insurance brokerages make it easier for policyholders to compare quotes for a variety of different types of insurance, including auto insurance.

Continue reading to learn the ins and outs of liability auto insurance in Canada.

What is liability insurance coverage and why is it important for motorists in Canada?

Regarding auto insurance, third-party liability insurance will cover the cost of third party property damage, injury, or death in the event that you are at fault in an accident. 

Third-party liability insurance covers legal fees and the lawsuit payout up to the coverage limits listed in your auto insurance policy (you do not need a lawsuit to have liability coverage to payout). In Canada, drivers are required to purchase a minimum of $200,000 in liability insurance coverage. However, our team at Surex strongly suggests opting for a higher coverage limit, like $2,000,000. 

Doing this may seem like a large jump from $200,000, but increasing your liability coverage limits is relatively affordable and can help you avoid dealing with expensive lawsuit costs in the future. 

If you happen to get into an accident that results in property damage, injuries or death, having a higher coverage limit will increase the likelihood that your insurance will cover all (or the majority) of your expenses. 

Lastly, if you were to injure someone with your vehicle and their life was completely altered because of the accident, they may sue you for millions of dollars. If you chose a small liability amount, the insurance would only pay up to that limit, and you would be responsible for the remainder. In Canada, if you owe money to another person from a lawsuit, your wages will be garnished until that payout is complete, and you will only be allowed to keep the equivalent of minimum wage. The slightly higher cost of a higher liability limit is worth the peace of mind to protect your financial future.

Be sure to keep this in mind while comparing liability car insurance quotes for your vehicle if you want to make the right decision.

Bonus — Are you on the fence about getting liability coverage or full coverage? Check out our previous blog post to determine which option suits you the best. 

What is liability coverage for recreational vehicles?

Liability coverage insurance for a recreational vehicle is relatively similar to liability insurance for a passenger vehicle. The key difference between the two is that the former covers vehicles that are (generally) used for entertainment purposes, like ATVs and motorhomes.

Here's a brief rundown of the third-party liability coverage requirements for recreational vehicles in Ontario:

• Motorhomes: Need to be insured in order to be driven and in some provinces, it is required to have liability coverage at all times, even when it is "parked".
• Holiday and travel trailers: Although liability coverage is not mandatory in Canada on travel trailers, it is highly recommended. Liability coverage from your private passenger vehicle will automatically extend to cover the trailer only when it is attached to the vehicle. Once it is detached, there is no longer any coverage. It is recommended to have the trailer insured separately so that if something happens that results in third party damage or injury while it is detached from the vehicle, you will be covered.
• Off-road vehicles and ATVs (on public property): Need to be insured in order to be driven on public property (this includes cross highways and roadways in permitted areas) and in some provinces, it is required to have liability coverage at all times, even when it is "parked".
• Off-road vehicles and ATVs (on private property): Insurance is not required but is highly suggested (it's beneficial to have third-party liability insurance in case you accidentally cause property damage, bodily injury or if the ATV is stolen and the thief causes property damage or bodily injury). Again, if you choose to insure your ATV, be aware that in some provinces, you cannot remove liability coverage at any point. 
• Personal watercraft coverage: Insurance is not mandatory in Canada, however there are certain circumstances where you would be required to insure it. For example, if you are mooring or storing your boat at a marina, there will likely be a minimum insurance requirement requested by the marina. Nevertheless, it is highly recommended to have boat insurance, specifically liability coverage, to insure you are covered in the event of an at fault accident causing property damage or injury involving your boat. 
• Motorcycles: Similar to private passenger vehicles, you are legally required to have liability insurance on the motorcycle to drive it. However, unlike private passenger vehicles, some provinces cannot remove liability coverage on motorcycles when it is stored or "parked" for the winter. 

Additionally, recreational vehicle owners should note that they need to have liability coverage in order to park their vehicles on public property. Many recreational vehicle owners believe that they can legally park their vehicles on public property if they have comprehensive coverage, but this is a common misconception. 

Feel free to contact your Surex insurance advisor to learn more about the insurance requirements for recreational vehicles in Canada.

When can't you remove liability coverage on private passenger vehicles in Canada?

You cannot remove your third-party liability insurance from your policy if you intend to use your vehicle on Canadian roadways. 

The main reason that third-party liability insurance is legally required is that it ensures that a motorist can cover the damage, injuries, etc., that they're responsible for. If third-party liability insurance wasn't required, not everyone would be able to cover their legal fees if they were to get into an accident.

It's also important to keep in mind that you cannot remove coverage from vehicles that are financed or leased without approval from the financing/leasing company. If you removed coverage, you could be in breach of your financial contract. 

What doesn't third-party liability insurance cover in Canada?

Liability insurance is a critical aspect of any insurance policy, but it doesn't cover everything. Third-party liability insurance covers legal fees and lawsuit payouts (related to third-party property damage, injuries, etc.), not personal expenses.

For instance, if you get into a collision and severely damage your vehicle, your liability insurance won't cover any repair or replacement-related expenses. In this situation, you'd need to add collision insurance to your policy.

Additionally, if your vehicle is damaged by a falling object, vandalized or stolen, your liability insurance won't cover any of the related expenses. In this case, you'd want to have comprehensive coverage included in your policy.

Bonus — Check out this article if you'd like to learn more about comprehensive auto insurance in Canada.

How can you get liability car insurance coverage in Canada?

The most efficient way of getting any type of insurance is by contacting an online insurance brokerage, like Surex. Online insurance brokerages work with a variety of insurance carriers, allowing them to provide you with several quotes at once. Instead of spending hours contacting insurance agents over the phone, you can opt for the "one-stop-shop" approach by teaming up with your very own Surex insurance advisor.

Save up to 25% when you bundle multiple insurance policies with Surex

If you're looking for a standard policy or want to include all the bells and whistles, you can find a policy that works for you when you team up with a Surex insurance advisor.

Whether you want to learn more about car insurance liabilities or want to jump right into the quote comparison process, we can help you get started.

Best of all, our team works quickly! Your personal Surex insurance advisor can provide you with the best auto insurance quotes in ten minutes or less! Contact us today to learn how we can help you save up to 25% when you bundle multiple policies with one of our trusted carriers, like Travelers.