What does Third-Party Liability insurance cover in automobile policies?

Third-Party Liability insurance is a crucial component of automobile policies, primarily designed to protect the insured from the financial repercussions of causing harm to other parties in an accident. This type of insurance covers two main areas: injury to other people and damage to their property.

When a driver is at fault in an accident, they may be held liable for medical expenses and rehabilitation costs for the injured parties. Additionally, if the accident causes damage to someone else's vehicle, Third-Party Liability insurance helps cover the cost of repairs or replacement of that vehicle. This ensures that the injured party is compensated without personal financial loss to the individual responsible for the accident.

Understanding the scope of Third-Party Liability is essential for any vehicle owner, as it is a legal requirement in many regions, including Ontario. This insurance does not, however, cover the insured's personal expenses or damages to their own vehicle, which is why the other options do not fit the definition of this type of coverage.