Insurance for Damage and Injuries


Whether you’re at work, in your car or involved in other activities, you do things every day for which you could be held legally responsible. “Liability” insurance can protect you if you cause property damage or bodily harm to another person.

Why Get Liability Insurance?

This kind of insurance can protect you if you do anything for which you could be held responsible. In other words, this insurance protects you from the financial consequences of your actions.

For example, if you cause damage to another person or her property and she wants you to pay for it, your liability insurance could come into play.

This kind of insurance covers you in two ways:

  • helping you defend yourself, which means paying your lawyer’s fees and other court costs if you’re sued
  • if you’re held responsible, by compensating the person who suffered the consequences of your actions

Liability insurance can cover your responsibility for not carrying out a contract properly, such as if you accidentally break a window while doing a window cleaning contract. (This is called “errors and omissions” insurance.)

It can also cover your responsibility for actions you take in everyday life, such as if you accidentally injury a passerby with your lawnmower. (This is called “civil liability insurance” or “individual insurance”.)

Your insurance policy describes the situations for which you are covered.

Also, civil liability insurance is normally included in your home insurance and the law requires it to be included in your car insurance.

What You Must Tell the Insurer

Before entering into your liability insurance contract, you must give the insurer all the relevant information you have. You must also answer the insurer’s questions truthfully and to the best of your knowledge. This will allow the insurer to properly evaluate the risk you represent.

Depending on the type of insurance, you must tell the insurer the following, for example:

  • what business activities you carry on, such as if you have a business building garden sheds
  • the chances that someone will sue you, such as the number of suppliers you do business with
  • past events that can have an impact on the insurance, such as the fact that you have been sued several times over the past few years

What you declare will have a significant influence on the cost of your insurance and the insurer’s decision whether or not to cover you.

Giving Wrong Information

If you make a false statement to your insurer when entering into your liability insurance contract or if you intentionally fail to mention something, the insurer can ask for your insurance contract to be cancelled.

However, to have the contract cancelled, the insurer must prove one of the following two things:

  • You were in “bad faith” by concealing the information, for example, you intentionally did not tell the insurer that you have been sued several times over the past few years.


  • The insurer would have refused to insure you if you had given it true and complete information.

If the insurer is able to prove one of these two things, it can refuse to defend you before the courts and to pay for damage you caused.

If the insurer is unsuccessful, it will have to defend you and pay for the damage you caused. However, it can reduce the amount it pays you by establishing the difference between the cost of your insurance and what you should have paid.

When Coverage Begins

Your liability insurance normally begins to cover you once the risk of a loss starts for you and the insurer agrees to insure you. That date is mentioned in your insurance policy.

The insurer might also offer you temporary insurance (also called a “cover note” or “interim contract”). The purpose of this insurance is to cover you temporarily until coverage starts under your main insurance.

Paying for Liability Insurance

The amounts you have to pay your insurer to benefit from liability insurance are officially called “premiums”.

You must pay the premiums at the time indicated in the insurance contract.

If you don’t pay one of your premiums, the insurer can do these things:

  • deduct the amount of the premium from any amounts it might owe you
  • take the necessary steps to force you to pay the premium (demand letter and lawsuit, if necessary)
  • send you a written notice informing you that your insurance will end 15 days after you receive the notice

Notifying the Insurer If Your Situation Changes

You must notify your insurer quickly when

  • something has increased the risk of someone suing you,
  • the increased risk results from events within your control, and
  • this change has a significant effect on the amount of the premiums, the evaluation of the risk or the insurer’s decision to continue insuring you.

An example would be if you sign a new, very large contract with one of your suppliers or you get a dog with a mean character.

Once you have told the insurer, it has two choices:

  • adjust the cost of your insurance (the “premium”) according to the new risk to be insured


  • end your liability insurance contract

If the insurer chooses to adjust the premium, you have 30 days to agree to and pay the premium. If you do not agree to it or if you do not pay the premium within 30 days, you will no longer be insured.

If you do not notify your insurer of a situation that increases the risk, the consequences are the same as in the case of giving wrong information.

Notifying the Insurer If You Could Be Held Responsible

When an event happens for which you could be held responsible, you must notify your insurer

  • in writing (letter sent by mail, fax, etc.) or verbally (e.g., by telephone), and
  • as quickly as possible, even if you’re not sure whether the situation is covered by your insurance or that you will in fact be sued.

Once the insurer is notified about the situation, it can ask you to provide it with information about what happened. It can also ask you to provide documents. You must respond to its requests as quickly as possible and honestly.

If Someone Takes You to Court

When you are sued for a situation that is covered by your liability insurance, your insurer must defend you. It must pay for the lawyer who represents you in court and all other court costs.

If the court decides that you have to pay for the damage you caused, your insurer will pay the money directly to the person who sued you.

In all cases, if the amount of the damage you caused is higher than what was provided as “coverage” in your liability insurance contract, you’ll have to pay the difference yourself. However, the lawyers’ fees, court costs and interest will be paid by the insurer, regardless of the amount of your coverage.

Situations When the Insurer Can Refuse to Pay

Even if you’re sued, the insurer can sometimes refuse to defend you and to pay for your actions.

Here are a few situations when it can refuse:

  • You didn’t notify your insurer of a situation for which you could be held responsible or you notified it too late, and
    • your conduct caused the insurer harm (for example, some evidence that would have helped it evaluate the damage have disappeared over time), and
    • your insurance contract clearly gives the insurer the right to refuse to defend you and to pay for your actions (called “forfeiture to the right to the indemnity”).
  • The situation that caused the person to sue you is not covered by your liability insurance (the situation forms part of the “exclusions”.
  • You intentionally provoked the event that caused another person damage.
  • You intentionally lied to the insurer about the circumstances of a situation involving your responsibility. For example, you minimized the impact of your actions by hiding certain details.
  • You signed a settlement agreement with the person who sued you to put an end to the case without your insurer’s agreement.

The End of Coverage

The insurer can cancel your liability insurance contract at any time by giving you 15 days’ notice.

You can also cancel the liability insurance contract at any time by giving the insurer notice. You stop being insured as soon as the insurer receives your notice.

At the end of the insurance contract, the insurer must give you any amounts you overpaid.

  • The insurance “policy” is a written document showing that an insurance contract exists and summarizing its main parts.
  • To change your insurance contract or add something to it, the insurer must have you sign another document that is added to the contract. This addition is officially called a “rider”.