Will homeowners' insurance cover a civil lawsuit in Canada?

Ever wonder, “Will homeowners' insurance cover a civil lawsuit?” The short answer is yes, sometimes. According to the Insurance Bureau of Canada (IBC), a standard home or condominium insurance policy in Canada includes a personal liability component, which kicks in if you’re sued for accidentally injuring someone or damaging their property.

According to Statistics Canada, Canada’s civil courts handled 516,099 active non-family cases during the 2022/2023 fiscal year. A civil lawsuit is any legal action filed by someone claiming you caused harm.

So if a guest trips on your icy porch or your pet nips a neighbour, your home insurance policy often covers both legal defence costs and any awarded damages, up to your coverage limit. But only as long as the injury or damage wasn't intentional.

What is standard homeowners' insurance in Canada?

A standard homeowners insurance policy in Canada is designed to protect you financially against unexpected events that could damage your home, belongings, or lead to liability claims. Typically, it includes four main types of coverage:

A standard or basic homeowners insurance policy includes coverage for named perils, meaning the insured perils must be listed (or named) in the policy in order for you to file a claim against it. Most Canadian insurance companies also offer options to increase coverage to broad or comprehensive home insurance, and to add endorsements for things like sewer backup, earthquakes, or high-value items.

What is covered under personal liability coverage?

The personal liability, or civil liability, portion of your home insurance coverage is there for financial protection if:

• Someone else gets hurt on your property, or

• You accidentally cause damage to someone else's property

Let’s say you forgot to shovel and put down salt after yesterday's snowstorm. A neighbour slips and falls on your icy front walkway and gets injured. If you're found legally responsible for not keeping the path safe, your personal liability coverage can help pay for their medical bills, legal fees, and any awarded damages, up to your policy’s limit.

It's important to note that this type of coverage doesn’t apply to injuries that happen to you or anyone living in your home. It’s meant to protect you financially from claims made by others, not cover your own household’s injuries.

Examples of civil lawsuits typically covered by home insurance

Home insurance policies in Canada can help protect you if you're faced with certain types of civil lawsuits. These lawsuits usually stem from accidents where someone claims you caused bodily injury or property damage, such as:

• A neighbour slips on your icy driveway and breaks a wrist

• Your child accidentally throws a ball through a neighbour’s window

• Your dog bites someone at the park

• A guest is injured by tripping over loose flooring in your home

• Your tree falls onto a neighbour’s shed during a windstorm

• Your dog escapes the yard and knocks someone over, causing injury

• You accidentally break an expensive item at a friend’s house while visiting

In these situations, your home, condo, or renters' insurance would typically cover the legal defence costs to defend you in court, including attorney fees, and pay any damages you’re found liable for, up to your policy's limit.

When is a civil lawsuit not covered by home insurance?

While the civil liability insurance included in your homeowners insurance can protect you in many situations, there are situations that are typically excluded from homeowners' liability coverage, such as:

• Intentional acts, meaning you deliberately hurt someone or cause damage

• Damage or injury caused by illegal activity

• Damage or injury caused by vehicles, watercraft, or aircraft

• Damage or injury caused by business-related activities, unless you have home business insurance

And remember, injuries to you or your household members aren’t covered under liability. This protection only applies to third parties. Contact BrokerLink to learn more about what your personal liability coverage does and does not cover.

How to increase your personal liability protection

Most standard home insurance policies in Canada include $1 million in personal or civil liability coverage. However, if you’re concerned that isn’t enough, there are a few ways to boost your protection, such as:

Increase your limit

First, you can start by asking your insurance provider for a limit increase. Many insurance companies offer the option to increase your limit to $2 million for a relatively small cost.

Umbrella insurance

Another option is to purchase umbrella insurance, also called excess liability insurance. This type of policy sits on top of your existing coverage and provides extra protection if a lawsuit exceeds your regular policy limit. This additional coverage can be particularly beneficial if you have any risk factors that could lead to a higher chance of being sued, such as:

• Owning a dog

• Having a pool

• Entertaining guests frequently

• Coaching a sports team

• Owning multiple properties

• Having a high-paying career, such as a lawyer or doctor

• Being responsible for those who work for you, such as a high-level manager

What to do if you’re served with a civil lawsuit in Canada

If you’re served with a civil lawsuit in Canada, contact your home insurance provider right away, as most policies require timely notice of any potential insurance claim. You'll need to provide them with all documents related to the lawsuit.

Your insurance provider will then review the situation to determine if it falls under your personal liability coverage. If it does, they’ll typically appoint a lawyer and cover your legal defence costs and potential settlement, up to your coverage limit. Just make sure you do not admit fault or try to handle it alone. Let your insurance provider guide you through the next steps.

Learn more with BrokerLink

If you still have questions about whether your home insurance policy will cover a civil lawsuit, contact BrokerLink. Our home insurance experts can help you review your policy and answer any questions you have. We can also help you find a new home insurance policy that is both affordable and tailored to your unique needs and risks to help ensure you're fully covered should you ever find yourself facing a civil lawsuit.

You can reach us by phone, email, or in person at any one of our locations throughout Canada. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.

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