Automobile Liability Insurance Coverage: A Top Ten FAQ

September 29, 2014

By Brian Babcock

1. If I am sued in an auto accident injury case, will my insurance company defend me in court?
The Ontario standard automobile policy, and the Insurance Act, require liability coverage as the basic coverage in every policy. Under that part of the policy, it is your insurer’s obligation to provide a defence for you if you are sued after a car accident.
2. What if I did not report the accident?
That is a breach of your policy. Your insurer may still have to pay injured people, but they may not defend you, and they might try to recover the payments from you. So – always report any accident!
3. What about “policy limits”?
You are personally responsible if the total amounts payable for all claims exceed your policy limits.
4. How much are my limits?
Your limit is a decision you make when you buy insurance. It is stated on the front of your policy. Ontario still has $200,000.00 minimum standard limits, but most insurers will only sell policies with higher limits.
5. How much of a limit should I have?
That is a question to discuss with your broker or agent. In severe injury or death cases, we occasionally see payments over $2 million – which is the most that most of us can buy as automobile liability insurance coverage (corporate coverage might be higher). So our answer is “as much as you can afford that the insurer will sell to you.”
6. So, what if I think I need more protection?
We are big fans of personal umbrella policies that provide excess coverage very cheaply over the auto limit (or most other personal liability). For good insurance risks in Thunder Bay, a personal umbrella policy (also known as a “PUP”) is a few hundred dollars a year to increase protection to $5 million. If you like your house and your toys, that is a modest amount to pay to protect yourself.
7. Who will defend me if I am sued?
Your insurance company hires and pays for a lawyer of their choice to represent you.
8. Can my insurance company settle the case without my consent?
In most cases yes. The standard auto policy gives them that right.
9. What if the claim is over my limits?
Then your insurer might HAVE to settle the case within limits if they can to protect your assets. This is discussed in our article “Bad Faith Insurance Claims”.
10. Do I need my own lawyer?
If the claim is in excess of limits, or there are coverage issues, you should talk to your own lawyer. If the case is within limits and the insurance company is handling it, you likely do not need a lawyer.