Third-party liability coverage is an important and mandatory component of any auto insurance policy in Alberta. It protects you and your assets if you are at fault in a motor vehicle accident. The most common coverage offered in Alberta is a $1 million third-party liability limit. However, the insured has the option to purchase additional coverage, albeit at a higher premium. $2 million policies are becoming more common, though are far from the norm.
Why would anybody ever need more than $1 million in coverage? Unfortunately, there are many ways that a judgement rendered against you could exceed $1 million. Motor vehicle accidents often involve many parties: drivers, passengers, pedestrians, all of which is compounded if the collision involves multiple vehicles. As such, if you’re at-fault for a serious collision involving many parties, there could be a number of claims made against you.
Consider Gordon v. Greig, an extreme case where the Superior Court of Ontario awarded $19 million in damages for a single vehicle collision with 3 passengers in the same car as the at-fault driver. Some of the passengers did not have their seat belts latched and sustained very serious injuries. If the collision had involved multiple vehicles, even more claims would be brought against the at-fault driver, further increasing the judgement against him.
When viewing third-party liability coverage in this light, it becomes clear how $1 million of coverage can be insufficient. While it is often the default option offered by insurance companies when purchasing a policy, drivers may find peace of mind purchasing additional coverage. As the saying goes, it is better to be safe than sorry.