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HomeCar Insurance ResourcesWhat is the liability insurance for cars in Canada?

Liability insurance for cars is a mandatory component of auto insurance in Canada. It protects drivers against the financial consequences of causing injury or damage to another person, their vehicle, or property while operating their vehicle. Every province and territory in Canada has its own minimum required amount of liability insurance, but all drivers must have at least some level of coverage.

Here’s an overview:

  1. Coverage: Liability insurance typically covers bodily injury and property damage that you, as the at-fault driver, cause to others. This does not cover injuries to yourself or damage to your own vehicle; other types of coverage, like collision or comprehensive insurance, are for that.
  2. Minimum Amounts: Each province and territory determines its own minimum liability coverage amount. For instance, in some provinces, the minimum required liability coverage might be $200,000, while in others, it might be $1,000,000.
  3. Additional Coverage: While there are minimum required amounts, many drivers choose to carry more than the minimum due to the potentially high costs associated with serious accidents. If damages exceed the policy limits, the at-fault driver may be personally responsible for the excess amount.
  4. No-Fault vs. Tort-Based Systems: Some provinces in Canada operate under a no-fault insurance system, meaning that each driver’s own insurance company pays for their injuries regardless of who caused the accident. Other provinces operate under a tort-based system where the at-fault driver’s insurance pays for the damages. The kind of system in place can affect how liability claims are handled.
  5. Territorial Differences: Here are some minimum liability amounts by province/territory:
    • Alberta: $200,000
    • British Columbia: $200,000
    • Manitoba: $200,000
    • New Brunswick: $200,000
    • Newfoundland and Labrador: $200,000
    • Nova Scotia: $500,000
    • Ontario: $200,000
    • Prince Edward Island: $200,000
    • Quebec: $50,000 (but note, this is for property damage only, as Quebec has a unique system for bodily injury)
    • Saskatchewan: $200,000
    • Northwest Territories, Nunavut, and Yukon: $200,000
  6. Other Considerations: Some provinces, like British Columbia, Saskatchewan, and Manitoba, have government-run insurance programs, while in others, insurance is provided by private companies. This can affect rates, coverages, and claims processes.

Liability Car Insurance Cost in Canada

Here are some examples of liability-only car insurance costs in Canada for different provinces and cities, based on a sample driver profile of a 35-year-old single male with a clean driving record, driving a 2018 Honda Civic LX:


  • Toronto: $1,140/year ($95/month)
  • Ottawa: $860/year ($72/month)
  • Hamilton: $920/year ($77/month)
  • London: $680/year ($57/month)
  • Windsor: $680/year ($57/month)


  • Calgary: $790/year ($66/month)
  • Edmonton: $760/year ($63/month)
  • Red Deer: $660/year ($55/month)
  • Lethbridge: $570/year ($48/month)
  • Medicine Hat: $540/year ($45/month)


  • Montreal: $530/year ($44/month)
  • Quebec City: $480/year ($40/month)
  • Gatineau: $480/year ($40/month)
  • Sherbrooke: $400/year ($33/month)
  • Trois-Rivieres: $360/year ($30/month)

Please note that these are just example rates based on a specific driver profile and vehicle. Actual rates may vary based on a variety of factors, such as the driver’s age, driving record, location, and vehicle make and model, as well as the insurance company’s individual pricing and discounts.

How much liability insurance should I have on my car in Canada

Determining the appropriate amount of liability insurance for your car in Canada depends on various factors, including your personal financial situation, where you live, and your risk tolerance. However, here are some general guidelines to help you make an informed decision:

  1. Minimum Requirements: First and foremost, every province and territory in Canada has its own minimum required amount of liability insurance. You must at least meet this minimum to legally drive. For many provinces, the minimum is $200,000, but some provinces may require higher limits.
  2. Consider Higher Limits: While meeting the minimum requirement might be the least expensive option, it may not provide adequate protection in the event of a serious accident. Medical bills, rehabilitation costs, and property damage can quickly add up. If the costs of an accident exceed your policy limits, you could be personally responsible for the difference. Therefore, many Canadians opt for higher limits, like $1 million or even $2 million, to have more comprehensive protection.
  3. Assess Your Assets and Income: The more assets and income you have, the more you have at risk in the event of a lawsuit following an accident. If you own a home, have savings, or have a substantial income, higher liability limits can help protect those assets.
  4. Cost Difference: The difference in premium between the minimum required liability insurance and higher limits might be less than you think. It’s worth getting quotes for various levels of coverage to weigh the costs against the benefits.
  5. Driving Habits and Risk: If you frequently drive in densely populated areas, have a long commute, or regularly drive with passengers (especially non-family members), these factors might increase your risk and the potential costs of an accident.
  6. Umbrella or Excess Liability Insurance: If you want even more protection than what’s offered by standard auto insurance policies, consider an umbrella or excess liability policy. These types of policies provide additional liability coverage beyond the limits of your auto (and sometimes home) insurance.
  7. Provincial/Territorial Differences: Some provinces, like Quebec, have a mixed system where bodily injury is covered separately, and the liability portion mainly pertains to property damage. Understand the specifics of how liability insurance operates in your jurisdiction.
  8. Regular Review: Your circumstances and needs may change over time. Regularly review your liability coverage, especially after significant life events like purchasing a home, to ensure it remains appropriate.

In Canada, liability insurance for cars covers the financial responsibility of a driver if they are found legally at fault for injuries or damage they cause to another person, their vehicle, or their property. It does not cover the insured’s own injuries or property damage; other coverage types are designed for that purpose.

Here’s a breakdown of what’s typically included in liability insurance for cars in Canada:

  1. Bodily Injury Liability: This covers medical expenses, loss of income, and other costs related to injuries that the insured driver causes to other people. This can include passengers in the other vehicle, pedestrians, cyclists, etc.
  2. Property Damage Liability: This covers the costs to repair or replace property damaged by the insured driver. This usually refers to someone else’s vehicle, but it can also include other types of property like buildings, fences, lampposts, etc.
  3. Legal Defense and Settlements: If someone sues the insured driver after an accident, liability insurance will also cover the legal fees and any settlements or judgments, up to the policy’s limit. If the costs exceed the policy limit, the insured may be responsible for the remaining amount.
  4. Death Benefits: In some cases, liability coverage can also provide a death benefit if someone dies as a result of the accident caused by the insured.
  5. Funeral Expenses: Some policies may cover funeral expenses if someone dies due to the insured’s actions on the road.
  6. Other Expenses: This might include costs like ambulance fees, and in some cases, rehabilitation expenses or care costs for those injured.

The above elements are covered up to the policy’s limit. Every province and territory in Canada has its own minimum required amount of liability insurance, but many people opt for coverage beyond the minimum due to the potentially high costs associated with serious accidents.

Understand the specifics of how liability insurance operates in each province or territory, especially considering that some parts of Canada use a no-fault system, while others use a tort-based system. In a no-fault system, each driver’s own insurance pays for their own injuries, regardless of who was at fault. In a tort-based system, the at-fault driver’s insurance would pay for the other party’s injuries and damages.

Cheapest liability car insurance in Canada

Finding the cheapest liability car insurance in Canada depends on several factors, including your location, driving history, the type of car you drive, and more. Additionally, insurance rates can change over time due to various market and regulatory factors.

However, here are some general tips and insights to help you find affordable liability car insurance in Canada:

  1. Shop Around: Different insurance companies might offer different rates for the same coverage. It’s a good idea to get quotes from multiple providers to compare.
  2. Provincial Insurance: Some provinces, like British Columbia, Manitoba, and Saskatchewan, have government-run auto insurance programs. In these provinces, basic liability coverage rates are standardized, but you can still shop around for optional additional coverages.
  3. Increase Your Deductible: If you choose to have collision and comprehensive coverages along with your liability insurance, consider increasing your deductible. This can reduce your premium, but remember, you’ll have to pay more out-of-pocket in the event of a claim.
  4. Bundle Insurance: If you have multiple insurance policies, like home and auto insurance, consider bundling them with one provider. Many companies offer discounts for bundled policies.
  5. Discounts: Ask about discounts. Many companies offer reduced rates for safe drivers, students, seniors, or those who complete driver’s education courses.
  6. Telematics Programs: Some insurers offer programs where they monitor your driving habits (through a mobile app or a device installed in your car). Safe driving habits can lead to discounts on your premium.
  7. Review Your Coverage Annually: As circumstances change, your insurance needs might change as well. Review your policy annually to ensure you’re not paying for unnecessary coverage.
  8. Maintain a Clean Driving Record: Safe drivers without any claims or traffic violations often qualify for lower premiums.
  9. Choose Your Vehicle Wisely: The make, model, and year of your vehicle can influence insurance rates. Before buying a new car, check insurance rates for different models.
  10. Consider Group Insurance: Some insurers offer group rates to members of certain organizations, alumni groups, or employees of specific companies.

Balance cost with adequate coverage. While everyone wants to save money, choosing the absolute cheapest policy might leave you underinsured, exposing you to potential financial risks.

Who is Liability-Only Insurance recommended to?

Car insurance coverage

Liability-only insurance, often simply called “liability insurance,” provides coverage only for third-party injuries and damages that the policyholder is legally responsible for, typically arising from auto accidents they caused. It doesn’t cover damages to the policyholder’s own vehicle or personal injuries they might sustain. Given its limited scope, liability-only insurance is typically less expensive than full coverage insurance (which might include collision, comprehensive, medical payments, and other coverages).

Here’s who might consider liability-only insurance:

  1. Owners of Older Vehicles: If your vehicle has significantly depreciated in value, the cost of full coverage insurance might not be justifiable. In such cases, it might make more financial sense to have liability-only coverage and pay out-of-pocket for any damages to your own vehicle.
  2. Those with a Tight Budget: For individuals struggling financially, liability-only insurance offers a more affordable way to meet legal requirements for auto insurance. However, this comes with the risk of not being covered for personal damages or injuries.
  3. Drivers with a Backup or Secondary Vehicle: If you have more than one vehicle and one is not used often or is less valuable, you might opt for liability-only on that secondary car.
  4. Those with the Financial Means to Cover Personal Damages: If someone has significant financial resources, they might feel comfortable covering their own vehicle’s potential repair or replacement costs and opt for liability-only to save on premiums.
  5. Drivers in Areas with Low Risk of Theft or Natural Disasters: Comprehensive insurance covers events like theft, vandalism, and damages from natural disasters. If you live in an area where these risks are minimal, you might feel comfortable skipping this coverage.

However, there are important considerations to keep in mind:

  • Risk: Without comprehensive and collision coverage, you’ll be paying out of pocket for any damages to your vehicle, whether from an accident, theft, vandalism, or natural events.
  • Lender Requirements: If you’re still paying off your vehicle, your lender will likely require you to have full coverage insurance to protect their investment.
  • Potential Financial Burden: If you can’t afford to replace or repair your vehicle after an accident, you might find yourself without transportation.

Before deciding on liability-only insurance, it’s crucial to assess your financial situation, risk tolerance, and the value of your vehicle. Consulting with an insurance professional can also provide tailored advice for your unique circumstances.

Does liability insurance cover car theft?

No, liability insurance does not cover car theft. Liability insurance is designed to cover damages and injuries that you cause to others. It does not cover damages to your own vehicle or personal losses.

If you want coverage for car theft, you would need to have comprehensive insurance. Comprehensive coverage is a type of auto insurance that covers damages to your vehicle caused by events that are out of your control, such as:

  • Theft
  • Vandalism
  • Natural disasters (e.g., floods, earthquakes, hurricanes)
  • Fire
  • Damage caused by animals
  • Falling objects (e.g., tree branches)

It’s worth noting that if you have a loan or lease on your vehicle, your lender or lessor might require you to carry comprehensive coverage to protect their financial interest in the vehicle.

If your car is stolen and you only have liability insurance, you would not receive any compensation from your insurance company for the loss of the vehicle. Always review your insurance policy and discuss your coverage needs with an insurance professional to ensure you have the appropriate protection.

What happens if my car is totaled and I only have liability insurance?

If your car is totaled and you only have liability insurance in Canada, here’s what generally happens:

  1. No Compensation for Your Car: Liability insurance covers damages and injuries you cause to others, not damages to your own vehicle. If your car is totaled, your liability insurance will not pay out any amount to cover the loss of your vehicle.
  2. You’re Responsible for Costs: You will be responsible for all costs related to the loss of your car. This includes towing, storage, and any loan balance that might remain on the vehicle.
  3. Loan or Lease Implications: If you still owe money on a car loan or are in a lease agreement, you’ll continue to be responsible for those payments, even though you no longer have the car. Your lender or lessor may require you to pay off the outstanding balance immediately if the car is totaled.
  4. If Another Party is At Fault: If another driver is at fault for the accident that totaled your car, you can file a claim against that driver’s insurance for damages. Their liability insurance may cover the value of your car, but this process can take time, and there’s no guarantee you’ll receive the full value of your vehicle.
  5. Insurance Premiums: While not directly related to the damage, it’s worth noting that if you’re found at fault for the accident that totaled your car, your insurance premiums might increase when it’s time for renewal, even though you only had liability insurance.
  6. Provincial/Territorial Differences: Keep in mind that insurance regulations can vary by province and territory in Canada. Some provinces, like British Columbia, Manitoba, and Saskatchewan, have government-run insurance, while others have private insurance. The claims process and available recourse might differ based on where you live.

Liability Car Insurance FAQs and Summary

Strength & Reliability

Here are some Frequently Asked Questions (FAQs) about liability car insurance in Canada, along with their answers:

Q: What is liability car insurance?

A: Liability car insurance provides coverage for bodily injury and property damage that you, as the driver, may cause to others in an accident. It doesn’t cover damages to your own vehicle or your personal injuries.

Q: Is liability insurance mandatory in Canada?

A: Yes, all drivers in Canada must have at least some level of liability insurance to legally operate a vehicle. The minimum required coverage varies by province and territory.

Q: What are the minimum liability coverage amounts in Canada?

A: Minimum liability coverage amounts differ by province and territory. For example, Alberta requires $200,000, while Ontario also mandates $200,000. It’s essential to check with local regulations to determine the exact requirement for your area.

Q: Does liability insurance cover damages to my car?

A: No, liability insurance only covers damages you cause to others. To have coverage for your own vehicle’s damages, you’d need collision coverage.

Q: If someone else drives my car and causes an accident, will my liability insurance cover it?

A: Generally, yes. In most cases, car insurance follows the car, not the driver. So if someone else is driving your vehicle with your permission and causes an accident, your liability insurance would typically cover the damages.

Q: Can I be sued if I cause an accident, even with liability insurance?

A: Yes, if the damages or injuries you cause exceed your liability coverage limits, the affected party can sue you for the excess amount.

Q: Does liability insurance cover me if I drive outside of Canada?

A: Typically, Canadian auto insurance is valid throughout Canada and the United States. However, if you’re planning to drive in other countries, it’s essential to check with your insurance provider and possibly purchase additional coverage.

Q: How is the cost of my liability insurance determined?

A: Several factors determine the cost, including your driving record, age, type of vehicle, where you live, and how often you drive. Each insurance provider may weigh these factors differently.

Q: Can I reduce my liability coverage to save money?

A: While you can choose to have only the minimum required liability coverage to save on premiums, doing so can expose you to greater financial risk if you’re at fault in an accident and the damages exceed your policy limits.

Q: What happens if I’m found driving without liability insurance in Canada?

A: Driving without mandatory liability insurance can result in significant fines, vehicle impoundment, suspension of your driver’s license, and increased insurance premiums in the future. It’s a serious offense.

Q: What’s the difference between third-party liability and full coverage insurance?

A: Third-party liability insurance covers damages and injuries you cause to others. Full coverage insurance typically refers to a combination of liability, collision, and comprehensive coverages, ensuring that both third-party damages and your own vehicle damages are covered.

Q: If I lend my car to a friend and they get into an accident, will it affect my insurance premiums?

A: Generally, yes. Since insurance usually follows the car rather than the driver, if your vehicle is involved in an accident while being driven by someone else (with your permission), it could impact your insurance rates.

Q: Is liability insurance more expensive for young drivers in Canada?

A: Typically, yes. Young and new drivers often face higher insurance premiums because they’re considered higher risk due to their lack of driving experience.

Q: How can I lower my liability insurance premiums?

A: Several strategies can help reduce premiums, including maintaining a clean driving record, bundling insurance policies (like home and auto), increasing your deductible, taking driving courses, or using winter tires (in certain provinces).

Q: Does my liability insurance cover rental cars?

A: Many auto insurance policies extend your coverage to rental cars within Canada and often the U.S. However, it’s crucial to check your policy or speak with your insurance provider before renting a car to ensure you’re covered.

Q: Are there discounts available for liability insurance?

A: Yes, many insurance companies offer discounts for various reasons, such as being a safe driver, being a student, bundling multiple insurance policies, or even being a member of certain organizations or alumni groups.

Q: What should I do if the cost of repairs is less than my deductible?

A: If the cost to repair damages (from an incident where you’re at fault) is less than your deductible, it’s generally advisable to pay out of pocket rather than filing a claim. This can prevent potential increases in your insurance rates.

Q: How long does an at-fault accident affect my insurance rates in Canada?

A: An at-fault accident can impact your insurance rates for several years, typically around 6-10 years, depending on the province and the insurance company’s policies. However, some insurers may offer “forgiveness” for the first at-fault accident if you’ve been a long-time policyholder with a clean record.

Q: Can I cancel my liability insurance if I’m not using my car for a while?

A: You can, but remember, it’s illegal to drive without insurance. If you’re storing your vehicle and not using it, you might consider reducing your coverage to comprehensive only, which will protect your car from non-driving related incidents like theft or weather damage.


About the Author: Valerie D. Hahn

Valerie is an insurance editor, journalist, and business professional at RateLab. She has more than 15 years of experience in personal financial products. She strives to educate readers and ensure that they are properly protected.

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