Philippe Cholette, CPA, C.I.B., RIBO

Everything You Need to Know About Civil Liability

Because of its complexity, civil liability is often misunderstood. However, a good knowledge of civil liability pays off, since it affects each and every one of us in our daily lives, whether at home, at a friend’s house, or as a driver, cyclist or pedestrian. Here are five things you should know about civil liability.

1. Definition

Civil liability can be summarized as follows: you will be held civilly liable if your actions or an object or person in your care causes harm to someone and there is a direct link between the fault and the injury caused.

However, for you to be held liable for an act, the victim needs to prove that:

  • You were at fault
  • An injury was caused to a third party
  • There is a direct link between the fault and the injury caused to the third party

To establish fault, perceived harm is not sufficient for a claim to be admissible. Jurisprudence, or previous court decisions that serve as a common denominator for future legal cases, is used to guide these types of judgments. The most important thing to remember is that the concept of fault is constantly evolving based on the various situations that arise.

Now that we’ve established the theory, let’s take a look at some examples of civil liability in practice!

2. Examples where you may be liable

  1. If a trailer in your care is improperly secured to your truck, detaches on a hill and crashes into the vehicle belonging to the person three houses down, this is considered to be damage caused by property in your care.
  2. If you are looking after your friend’s dog and the dog bites the mail carrier, the animal is in your care and you may be liable.
  3. You could also be liable if a child in your care causes damage to a third party.

3. Civil liability car insurance in Quebec

In Quebec, civil liability car insurance protects drivers when they are at fault and covers property damage and bodily injury to a third party (if it is not covered by the SAAQ). If you are not at fault, your property damage could also be covered through civil liability insurance under a direct compensation agreement.

To operate a motor vehicle in Quebec, all vehicle owners must hold a civil liability insurance policy of at least $50,000. Although this is the legal limit, experience has shown that it is nowhere near enough, regardless of what you use your vehicle for. Instead, you should purchase $2,000,000 in liability coverage if you are eligible.

Imagine the following nightmare scenario: you lose control of your vehicle, collide with a building and cause a fire that spreads to other structures. While this type of situation is disturbing to consider, don’t make the mistake of thinking it only happens to others. It’s not hard to imagine the astronomical amount of property damage involved…

Outside of Quebec, the risk is even greater. In addition to property damage, civil liability insurance also covers bodily injury. For example, if you hit a pedestrian in the United States, you will almost certainly be sued. A higher liability limit protects you in the event of an accident (though not if you commit a criminal offence).

4. Civil liability and home insurance

To provide a concrete example, you and your family rent a waterfront cottage. You light a campfire and the wind picks up. You suddenly lose control of the fire, which spreads to the neighbouring property and burns down the cottage next door. Luckily, the neighbours are out that evening, so there are no serious injuries. However, the total damage to their second home is $1.2 million (it’s a very nice cottage!). The owners also claim $100,000 for loss of use, since they are unable to visit their cottage that summer. What does your civil liability insurance cover?

Your insurance covers the total of $1.3 million, as well as the investigative and legal fees (on top of your coverage limit).

This example illustrates the importance of civil liability coverage that is not limited to one place!

5. The most common misconceptions

  • I don’t need that much civil liability coverage. As the example of the neighbour’s cottage fire shows, opting for a coverage limit of $1,000,000 instead of $2,000,000 could cost you $300,000 out of pocket. You may be forced to sell your belongings in order to pay the damages.
  • In Quebec, the SAAQ covers all damage under its no fault insurance plan. The SAAQ covers bodily injury, regardless of who is responsible for an accident. However, property damage must be covered by you or your insurer.
  • I already purchased civil liability insurance for my vehicle, so I’m covered everywhere. With civil liability car insurance, you are only covered in Canada and the United States. Please note that although Hawaii and Puerto Rico are part of the United States, your civil liability car insurance does not apply in these areas.

To conclude, it is crucial to consider civil liability insurance and ensure you have the right coverage based on your circumstances. If you have any questions or concerns, don’t hesitate to contact one of our brokers. It will be our pleasure to assist you. After all, it’s our area of expertise! Contact us now.

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Philippe Cholette, CPA, C.I.B., RIBO Damage Insurance Broker See the profile

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