In my last post I recommended you purchase a minimum of $2,000,000 third party liability insurance. Until very recently in Alberta this was the maximum a private motor vehicle owner could purchase (commercial vehicles have been able to purchase $5,000,000 for several years now). However, now, if you make a specific request of your auto insurance company, you may be able to purchase $3,000,0000 or more of private liability insurance for your car or truck. You should also carry this amount on any ATV vehicles or snowmobiles you own and operate.

There is another way to increase your third party liability limit by an additional $1,000,000. It is called an Umbrella Policy which is purchased as a rider on your homeowner’s insurance policy. An umbrella insurance policy, as the name implies, is a policy that is designed to cover you for a number of various claims that may be brought against you if you do something wrong including, for example, defamation of character. However, one of the more significant benefits of an umbrella policy is that you can top up the third party liability auto insurance limit on your motor vehicle by an additional $1,000,000 of liability insurance. This additional amount of third party liability insurance will now give you a combined $3,000,000 of liability insurance in the event that you cause a catastrophic motor vehicle collision with catastrophic or fatal injuries to innocent victims. If your auto insurance company will sell you $3,000,000 of liability insurance, then combined with the umbrella policy you will be protected up to $4,000,000 of claims against you.

Thus the best approach is to purchase $3,000,000 liability insurance on your vehicle (it only costs approximately $59 more per year to go from $2,000,000 to $3,000,000) and then add a $1,000,000 umbrella policy on your house policy for an additional couple hundred dollars per year and that will then provide you with $4,000,000 liability insurance when you or someone you give consent to operate your vehicle causes a major collision and causes catastrophic personal injuries or death to other people.

Brent L. Handel, Q.C.