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Get the best rates on third-party liability car insurance.

Driving is inherently risky. Even if you’re a careful driver, you can never rule out the possibility you’ll be involved in an accident. That’s why you need to be prepared for the off-chance you cause an accident that results in property damage or injuries. Third-party liability car insurance prevents you from paying for the damage out-of-pocket and is the only type of car insurance that’s mandatory across Canada.

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Your third-party liability auto insurance questions, answered.

What is third party liability insurance?

Third party liability insurance protects you in the event that you’re sued by someone for causing bodily injury or damage to their property in a collision.

What does third-party insurance cover?

In Canada, third-party liability insurance kicks in if you’re found responsible for damage to a person’s property, injuries, or death. To get even more granular, third-party liability coverage includes:

  • The cost of repairs to any vehicles damaged in an accident for which you’re determined to be at fault.
  • Any repairs to property you damaged during the accident.
  • Any associated medical costs because of the accident.
  • Lawsuits and legal fees.
  • Damages to any injured parties as a result of legal judgements against you.
  • You cause death during an accident and are sued by the family.

If you own a car, the law states you must purchase third-party car insurance. This is the minimum amount of insurance you’re allowed to have if you own a vehicle in Canada.

But not everyone owns a car. Some people rely on car rentals. How does third party insurance work then? Well, if you’re using a rental car, the third-party liability insurance minimum coverage that comes with the rental is $200,000. If you want any more than that, you’ll have to purchase extra.

What else is covered under third-party liability auto insurance?

You may think you’ll only need to use your third-party liability insurance if you’re involved in a car accident — but it actually offers coverage in many other scenarios, including if you:

  • Knock over a pole or part of your neighbour’s fence while reversing.
  • Hit a cyclist or pedestrian and you get sued for damages including medical fees.
  • Lose control of your car in bad weather, hit something and damage property.
  • Get sued by a passenger in your car.

How does third party-liability insurance work?

Third party insurance kicks in when someone sues you for bodily injury or property damage. But what you might not know is that it actually offers coverage in many other scenarios, including if you:

  • Knock over a pole or part of your neighbour’s fence while reversing.
  • Hit a cyclist or pedestrian and you get sued for damages including medical fees.
  • Lose control of your car in bad weather, hit something and damage someone’s property.
  • Get sued by a passenger in your car.

Does third party liability insurance cover damage to the other car?

The answer to this depends on which province you live in.

In provinces that use a tort-based auto insurance system, where you only receive a certain amount of compensation from your own insurance company in the event of a collision and have to sue the other driver’s insurance company for additional compensation, your third party liability insurance would kick in and cover the cost of the damage to the other driver’s car, as well as any bodily injuries.

In no-fault provinces, such as Quebec and Ontario, where you deal only with your own insurance company, not the other driver’s, your collision coverage would kick in to cover the damage done to your own car. And the other driver’s accident benefits coverage would cover their injuries, and their direct compensation-property damage (DCPD) would cover their vehicle damage.

What’s the difference between third party insurance vs comprehensive?

Comprehensive auto insurance coverage protects your vehicle against damage not caused by a collision. Think hail, vandalism and theft, or a tree falling onto your car during a storm. If you own your car, then comprehensive coverage is optional. If you lease or finance your car, then comprehensive coverage is mandatory.

Third party liability insurance, on the other hand, protects you in the event that you’re sued by someone for causing bodily injury or damage to their property in a collision.

How much third-party liability auto insurance do I need?

The minimum recommended amount is $200,000 but you may want to consider buying a larger policy if you know you’re at a greater risk for damage and injury, and especially if any of the following apply to you:

  • You carpool and frequently drive with others in the vehicle.
  • You drive your vehicle for work.
  • You drive in the United States frequently.
  • You drive in a higher risk location (more traffic, cars, higher accident rates).
  • Damages to property and person, plus repair costs, medical and legal fees will add up and can end up costing way more than $200,000.

In other words, if you only have coverage for $200,000 and you’re sued for $1-million, you’ll have to pay the remaining $800,000 out of pocket.

Insurance experts recommend buying a policy worth $500,000 to $1-million.

How much does third-party liability car insurance cost?

It’s tricky to pin down the average cost of third-party liability car insurance.

The price you pay for third-party insurance depends on the make and model of your car, the province you live in, and the cash value of your auto insurance policy.

It’s in your best interest to compare the cost of third party car insurance from multiple providers before you make a decision. You can search for third party insurance quotes online to see how much you could pay. This is the easiest and cheapest way to secure third party car insurance.

Where can I buy third-party auto insurance in my province?

Third-party liability auto insurance is mandatory for drivers in Canada. But because auto insurance isn’t administered the same way in each province, how to get third party insurance varies based on where you’re driving your car.

In some provinces, the government administers this product, while in others, third-party car insurance is provided by insurance companies.

British Columbia

In British Columbia, most registered vehicles must be covered by the Insurance Corporation of British Columbia (ICBC), which was formed by the NDP in 1973 as a non-profit provincial crown corporation.

The coverage provided by ICBC is the basic level of coverage with $200,000 in third-party liability insurance.

Non-mandatory additional coverages — like fire, theft, and collision coverage — are available from private insurers. If you own a vehicle that is valued at more than $150,000, ICBC won’t provide coverage.

Private auto insurance providers in British Columbia:

  • Intact Insurance
  • Reliance Insurance
  • Belair Direct
  • Desjardins Insurance


Saskatchewan uses a system similar to B.C.’s.

When you register a vehicle with Saskatchewan’s driver licensing and vehicle registration, you pay a flat fee and that provides a basic insurance package on your plates. Insurance is provided by Saskatchewan Government Insurance (SGI).

Third-party liability insurance in Saskatchewan covers damages to your vehicle caused by another vehicle, property or injury to persons, but the benefit is quite small: less than $1,000.

Drivers are recommended to buy extra coverage from private insurers.

Private auto insurance providers in Saskatchewan:

  • Aviva
  • AGI Insurance
  • The Co-operators


Manitoba offers basic third-party liability insurance with coverage up to $200,000 via Manitoba Public Insurance.


Unlike B.C., Saskatchewan and Manitoba, Alberta drivers purchase their insurance from private providers.

Private auto insurance providers in Alberta:

  • Aviva Insurance
  • Wawanesa Mutual Insurance
  • Desjardins Insurance
  • Security National Insurance Company
  • TD Insurance


If you’re a licensed Ontario driver, you have to buy third-party liability auto insurance from private insurance companies.

Private auto insurance providers in Ontario:

  • The Co-operators

How can I ensure I get the best price for third party car insurance?

The smartest way to go about it is to compare prices for third party car insurance online. Our auto insurance quoter allows you to compare third party insurance quotes from 50+ Canadian insurance providers.

Lisa Coxon

Lisa Coxon

About the Author

Lisa is an Editor and Writer for Her work has appeared in Reader’s Digest, Toronto Life, Canadian Living and TVO. As a child, she diligently hoarded the $50 bills that fell out of her Christmas cards. Adult Lisa is working hard to resurrect those stockpiling tendencies.

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