Several recent BC cases have once again shown the dangers of having low third party liability limits on your ICBC policy.
Third Party Liability (TPL) is the amount that ICBC will pay out on your behalf should you be at fault in an accident and cause an injury to someone else (the "third party"). The amount of your TPL coverage is chosen by you when you take out or renew your automobile insurance.
Of course $ 1million TPL is cheaper than $2 million, or $5 million, but is it wise to chose inexpensive insurance?
Many people make the mistake of thinking $1,000,000 TPL is sufficient coverage.
If you have no assets, do not own a house, or a business, do not have a good income, and have absolutely no hope of ever owning any assets, then $1 million is enough.
If you own a house, a business, have a reasonable income, or have any assets, then $1 million is definitely not enough.
Two recent cases in BC point out the short term folly of being cheap when you buy car insurance.
Both cases involved an individual who was brain injured in a car accident.
Both cases resulted in an award of over $5 million in damages, and they were not that unusual.
And these cases were both in BC, not the United States.
If you only have $1 million TPL limits, and cause someone serious injuries, you are personally responsible for the excess judgement over the $1 million coverage. Unless you can cover the $4 million difference, can you spell bankruptcy?
You could lose everything you have, including your house, your cars, your RRSPs, and your business.
If you have substantial assets, you have substantially more to lose.
The costs for TPL are approximately as follows (based on an average car, average driving history, after Roadstar, pleasure use, driving to a from work)
-1 Million TPL – $87 per year
-2 Million TPL – $124 per year
-5 Million TPL -$174 per year
-10 million TPL – $198 per year
So you can see, the extra cost is not that much, considering you may go bankrupt if you dont have sufficient coverage.
If you like to gamble with your future, take out minimal TPL coverage on your car and house insurance.
If you want to protect you and your family from possible financial ruin, run – don’t walk – to your insurance broker, and increase your TPL coverage.
It could be the best insurance, and investment, you ever make.
Send this e-mail to your associates, friends and family, and tell them to review their coverage.
If they don’t have e-mail, print this out and send it to them.
It could be the best gift, and advice, they ever receive from you.
(P.S. Don’t forget, if you lend your car to someone, including your teenager, and they cause a serious injury, you are still responsible for the full amount of the claim, as registered owner of the car. And if you drink and drive and are impaired, and cause an injury, you are personally responsible for the entire claim, as your insurance will be voided entirely).
If you have any questions, please call Paul Mitchell, Chair of our Personal Injury Law Group at 250-869-1115 or e-mail him at [email protected].
