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Help! I don't own a car but need insurance

My husband and I live in Ottawa. We don't have a car and rent one when we need one. It works well for us. However, we have become concerned that the maximum third-party liability coverage we can get in Ontario is $200,000, which does not seem much in the context of personal injury. Furthermore, we often rent a car in the United States and the situation there is even more alarming as, depending on the state, coverage is vastly inadequate, sometimes only $15,000. In the unfortunate case that we were to cause accidental injury to a third party, the results could be devastating.

Do you know of any insurance agency that sells standalone rental vehicle policy coverage for a specific trip if you don't own a car? I have made numerous calls and got nowhere. Most people cannot get over their surprise that we do not own a car. They say that the only way to increase coverage is to add an endorsement to your own car insurance policy. However, you need a car to have one of those. – Alexandra in Ottawa

You're wise to be concerned about having adequate third-party liability coverage. Collision and comprehensive insurance cover damage to, or loss of, your vehicle, while third-party liability covers damage you cause to another person or their property.

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The law requires all vehicles in Ontario, including those owned by car rental companies, to carry a minimum of $200,000 third-party liability insurance. The rental agencies I contacted, however, say they carry at least a million in third-party coverage.

"Car rental companies can't sell liability; it's the law that it comes with the car. The car has to have liability, so whatever the company policy has is what would be available to their customers," says an Associated Canadian Car Rental Operators spokesperson.

Many motorists who rent also own a vehicle. For a fee, a personal auto insurance policy can typically be extended to cover the operation of a rental vehicle and increased liability protection may be added that way. But what if you don't own a vehicle?

In provinces such as British Columbia, Manitoba and Saskatchewan, residents can purchase standalone insurance coverage for rental cars – even if they don't own a vehicle.

However, you live in Ontario, where, according to regional insurance industry experts, it's not possible to do so without a pre-existing auto policy. In addition, the car rental coverage available through certain credit cards does not include third-party liability. So what can you do?

If you have home insurance, you may be able to increase your liability coverage for a variety of situations, including a scenario in which you're sued by a third-party for injuries or damage in an auto accident you caused.

"It's not pure car insurance; it's called umbrella liability insurance. You get that from your agent or broker, if you have car and/or home insurance with them – you don't have to have car insurance. What this does – just as the visual of the umbrella – is close gaps in your insurance protection. And it gives you higher limits of liability for your home, for all sorts of personal situations. But it's important to speak with the agent or broker because there are conditions about having a primary insurance," says Natalie Dupuis, senior product manager, auto, for RBC Insurance.

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So how much third-party liability is enough? "At a minimum, for an average family, I wouldn't go anywhere under $500,000. But a million is probably the best bet. Defence costs alone could be $50,000 to $100,000 and that's just the lawyers, never mind the actual judgment," says Dupuis.

If you have higher net worth, adds Dupuis, more third-party coverage may be desirable.

In the United States, the mandatory minimum liability can be as low as $15,000-$25,000, depending on the state. The good news is that car rental companies in the United States are allowed to sell additional third-party liability insurance to customers. If you're renting a car south of the border, purchase this coverage.

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About the Author

Joanne Will is based in Toronto. She has been a regular contributor to The Globe and Mail since 2009. In 2014, she was a Knight-Wallace Journalism Fellow at the University of Michigan. More


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