Thursday , August 11 2022
auto insurance

Auto Insurance Limits Explained

An auto insurance limit is the maximum amount that the car insurance company will pay for an accident where the customer is deemed at fault. If the amount of claims exceeds the limit, the individual is responsible for paying the balance out-of-pocket.

It’s a difficult position to be in, notably if the accident resulted in a lot of property damage or bodily harm, resulting in huge costs. You should attempt to understand auto insurance limits before applying for car insurance or renewing a policy.

Different provinces also impose different minimum limits for third-party insurance, but you can get covered for more damage. Let’s examine how auto insurance limits work in-depth:

What a standard auto insurance policy entails

There are bare minimum auto insurance coverages you are required to purchase depending on where you live. In Ontario, the standard insurance plan must include:

  • Third-party liability;
  • Statutory accident benefits;
  • Direct compensation property damage;
  • Uninsured assured automobile coverage.

The Third Party Liability Coverage protects the driver in case someone is injured or suffers a fatality. It provides protection for any damage to third-party property in the accident but does not offer protection for the driver’s property. It’s the bare minimum coverage across all provinces and will pay for claims.

The mandated Third-party auto insurance limit varies depending on the province, and you can use this quick table for reference:

Province Auto Insurance Minimum Limits
Ontario $200,000 in Third-Party Liability
Alberta $200,000 in Third-Party Liability Coverage& Accident Benefits
British Columbia (where ICBC is the primary insurer for all BC drivers) $200,000 on the Basic Autoplan Cover
Quebec $50,000 Civil Liability Coverage
Manitoba $200,000 in Third-Party Liability
New Brunswick $200,000 in Third-Party Liability
Nova Scotia $500,000 in Third-Party Liability
Newfoundland and Labrador $200,000 in Third-Party Liability
Saskatchewan $200,000 in Third-Party Liability

Will I be okay with the Bare minimum?

If you are responsible for a crash, the costs can significantly increase, as it can involve costs for medical expenses, wage losses, or property damages.  Most people choose to increase their coverage. For instance, in Alberta, 98% of vehicles have a minimum auto insurance limit of $1 million for third-party liability. When working with a private insurer, you just need to purchase a higher liability limit or upgrade to a higher plan. You can even increase your third-party liability coverage to $1 – $5 million.

You can also think of increasing your benefits for other coverages, such as accident benefits coverage.  For instance, it’s possible to add income replacement benefits, which makes you eligible for a weekly supplemental income that’s up to 70% of your gross income if you can’t work following an accident.

You can also ask your insurance company if they offer other extra options on the basic insurance plan like:

  • Caregiver, housekeeping & home maintenance benefits
  • Unlisted driver protection – when a non-listed driver causes a crash.
  • Death & funeral benefits –  to pay for funeral expenses.
  • Medical, Rehabilitation, & Attendant care benefits
  • Indexation benefits

Increasing Third-party coverage is not expensive

If you want to join the ranks of other Canadians and set your insurance cover between $1 million to $5 million, don’t worry about paying for significantly higher premiums. Your insurance premiums will only increase by a small percentage. If you’re not getting a good deal, it may be time to shop for new providers. To find the best deals, consider using insurance comparison sites and marketplaces such as Surex.

Per-person & Per-Accident Limits

When shopping for a car insurance policy, keep in mind that a $200,000 limit may not mean that the insurance company will pay $200,000 for bodily harm or property damage. Insurance companies have other types of limits, including:

  • Per person bodily harm liability limit – It’s the maximum amount they will pay for bodily harm caused to each person involved in the accident. 
  • Property damage liability limit – It’s the max payout for damage inflicted on another person’s property.
  • Bodily injury per accident limit – This is the maximum payout the insurance provider can pay for medical expenses for people involved in a single accident.

Let’s examine a hypothetical situation: 

Your insurance cover has a $20,000 limit for bodily injury per person and a $50,000 bodily injury per accident limit.  If you’re involved in an accident that causes bodily harm to 3 people and all have medical expenses totalling $60,000, it may be necessary to cover the extra $10,000 with your personal assets. 

Claims, Damage Types, & Lawsuits – Explained

It’s vital to be acutely aware of damage caps and the process of filing a personal injury claim following an accident. There are three types of damages: General damages, Punitive damages, and Special damages. If the damage is not easily quantifiable, it’s considered General damage.

Personal injury law can be a bit complex because of the laws involved. For instance, the Supreme Court capped the value of damages awarded for Pain and suffering in 1978 to about $340,000 in personal injury cases. But that doesn’t mean that a claim will yield that amount. There are deductibles subtracted from the claims in certain instances.

Special damages can be quantifiable through medical bills, repair costs, household expenses, or lost earnings. Punitive damages punish the defendant for outrageous conduct, for instance, using a vehicle to cause bodily harm intentionally.

A personal injury lawsuit can take anywhere from 1 to 5 years to settle depending on the case’s complexity, amount of damages, level of injuries, or how soon the parties want to resolve the case.  For instance, a claim that involves rear-ending will be much easier and quicker to resolve than an accident that left one of the injured parties severely disabled.

Bottom Line

Remember that the third-party liability insurance package will have property damage and bodily injury coverage limits. It’s essential to check all limits to ensure that you’re comfortable with them. 

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