Auto/Vehicle

Guide To Third Party Motor Vehicle Insurance

When you are driving your vehicle, the chance of an accident can never be zero. Sometimes, accidents may happen. In some accidents, you may be the victim, while in some, it might be your fault and others may be harmed. In the latter case, you might have to pay for any damages sustained by the victim.

However, in the absence of an insurance policy, this might cause a significant financial drain.

If you look around in the insurance industry, you will find numerous types of insurance. The Automobile Insurance Act makes it mandatory for all vehicle owners to have insurance for their vehicles.

While insurances like accidental insurance and collision insurance financially protect you in case of your accident, third-party insurance protects you if you are found guilty of causing an accident and subsequent damages to another vehicle. Under the same law, it is mandatory to have third-party liability insurance. You can visit Surex for more information on the types of insurance and their costs.

Third-Party Liability Insurance – What is it?

Under the Automobile Insurance Act, there are five parts of insurance.

  • Direct Compensation
  • Statutory Accidents Benefits Coverage
  • Third-Party Liability Insurance
  • Uninsured Driver Coverage
  • Optional Coverage

Out of these insurances, the third-party liabilities would protect you if you are at fault in an accident. If someone claims any damages against you and it is established that it was your fault, this coverage helps you pay them the settlement.

This insurance would help you pay for any repairing or medical cost up to the amount insured. Although you’d have to still bear the cost of your deductibles, a significant portion of the costs would be covered by your insurance provider.

Coverage

Since accidents can involve various types of damages, liability insurance allows coverage for protection for various damages such as:

  • Repairing cost of any property or vehicle damage by your fault
  • Medical expenses for the damaged person
  • Legal expenditure
  • If someone sues you for any death in an accident
  • Hitting a pedestrian or a cyclist
  • The passenger in your car sues you for any injury

For any damage caused to your vehicle/property by your vehicle, third-party insurance will not be valid. For these claims, you need other insurances such as collision or comprehensive coverage.

How Much Third-party Insurance Do I Need?

According to the Automobile Insurance Law, $200,000 is the minimum insurable amount for third-party liability insurance, barring provinces like Quebec ($50,000) and Nova Scotia ($500,000).

There is a cap on the property damage payment, which differs from province to province. Experts suggest making a third-party insurance policy with at least $1 million because someone can sue you for more than the minimum amount in a single accident.

For example, if your policy is worth $200,000 and someone sues you for $500,000 and wins the settlement, you will have to pay the remaining $300,000. It can take a massive hit on your savings and plans. So, it is always advisable to opt for a policy with a higher amount.

How can I get Third-Party Insurance?

Most private insurance companies provide third-party insurance. If you want to buy or renew insurance for your vehicle, you can contact your insurance provider and discuss your needs with them. If you are extending, you can either go on with the same plan or think about upgrading to a better plan with more coverage.

If you are renting a car, your insurance can still protect you. Adding this clause to your policy will protect you if the rented vehicle is damaged or lost. It does not cost much but increases your protection. In Ontario, you can fill OPCF 27 (Ontario Policy Change Form 27) and add it to your policy.

How Much Does It Cost?

It might be very difficult to place a finger on a single figure for premium for third-party insurance. The rates depend on a variety of factors such as the type of car you are driving, the history of accidents in your area, the proportion of claims filed, and so on. It can range anywhere from $600 to $1600. Make sure you visit compare insurance providers before selecting one.

How to claim Third-Party Insurance?

If you are at fault in an accident and someone is injured, they can file a claim. You will have to provide your insurance details to the injured and note all the details involving the accident, like date, time, people and their contacts, damage, etc., for future reference.

Meanwhile, the injured person would start receiving treatment and get their property or vehicle repaired. The laws regarding payment of repair or injuries vary from province to province. The insurance provider assesses the claim before a claims adjustor gives the final decision on the claim. Now, your policy can either offer a settlement, or the person who filed the claim can take a legal step by filing a lawsuit.

What if you do not have Third-Party Insurance?

Third-party insurance is deemed mandatory by the law. If a person of law finds you without proper insurance, they can take legal actions against you.

There may be either heavy fines, suspension of your license for a year, or impounding your vehicle for up to 3 months. You probably wouldn’t want to run into any of these consequences. Thus, it is always safer to have insurance.

Endnote

Accidents can never be predicted. Thus, it is always wise to be on the safer side. Third-party insurance ensures that you are adequately covered in case of an issue. Apart from the mandatory portion of the insurance, you can choose to go for additional cover depending upon your driving history and habits. This is a decision you would have to make for yourself.

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