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The Civil Liability Guarantee of Your Home Insurance Policy

La responsabilité civile de votre assurance habitation - Lussier Dale Parizeau
Jacques Bigaouette | July 24, 2017
If you were to ask a property owner to describe the civil liability coverage included in his home insurance policy, they would probably respond by saying: «That’s if someone were to come to my house and injure themselves! » While this is a good answer, it needs to be further explained to clearly define the scope of liability insurance.

Civil liability guarantee to cover private life activities

The civil liability guarantee that is included in a home insurance policy covers the financial repercussions of damage or injuries caused by the insured to third parties, in the context of private life activities.

A bike ride, for instance, is a good example of a private life activity. Let’s say you get distracted by an incoming text on your phone and collide with another cyclist coming from the opposite direction – the material damages (bicycles) as well as bodily damages (leg, arm injuries etc.) will be claimed by the cycler that you hit, on you. Civil liability insurance was, essentially, crafted for situations such as these.

When you are held responsible for damages incurred to third parties

Civil liability guarantee applies when a private life activity (such as riding your bike) causes damage(s) to a third party. For example, if you are hosting people at your house and one of your guests misses a step on your staircase and breaks their ankle, you should not necessarily be held liable simply because you are the proprietor.

According to civil law, there must be a direct link between your actions to prevent such occurrences from happening and the damages suffered by your guest. Suppose your stairs are constructed abiding by all the rules and there was no foreign object obstructing circulation at the moment your guests arrived, it is less likely that you would be held accountable for their injuries.

Investigation and legal fees are covered in addition to the insurance coverage amount

You received a notice from an individual you do not know. This individual alleges that you contributed to the total loss of his chalet due to your negligent manner of starting a camp fire. Given the date and location indicated on the notice, you remember that you rented a neighbouring chalet during that time. You remember the St-Jean night you hosted for several guests that ended with a campfire near the water. 

Gathering all the information, interrogating witnesses, the claimer and emergency services is not a simple task. The investigation should be entrusted to an insurance broker, whom will invest the time to find out what really happened in order to prepare your defense. Investigation costs can vary from 30,000$ to 40,000$, depending on the case.  

The owner of the destroyed chalet is claiming 750,000$ from you for the building and its surroundings. In addition, he is asking for 150,000$ for the time lost at his chalet, and an additional 150,000$ for debris removal and landscaping redesign. This is a total amount of 1,050,000$; but the total amount of your CL insurance is 1,000,000$.

It is highly likely that the case against you will never lead to fruition, as it will be difficult for the claimant to prove the direct link between your campfire and the damage sustained to his home, which was 30 meters away from the incident in question. This would have to be brought in front of a judge, and legal and litigation costs can cost up to 200,000$, depending on the amount of witnesses called to the stand.

Let’s summarize the financial implications of this claim:

  • Damages the third party is alleging were made to his cottage:
    Total loss: 750,000$
    Time lost at the chalet: 150,000$
    Debris removal and landscaping redesign: 150,000$
    GRAND TOTAL :  1,050,000$
  • Expenses related to the settlement of the claim:
    Investigation costs : 40,000$
    Legal fees : 200,000$
    GRAND TOTAL :  240,000$

If no civil liability coverage existed, the aggregate amount for the person receiving this claim would be 1,290,000$ (1,050,000$ + 240,000$). Such an amount would surely impact all of the persons assets accumulated over their lifetime; it is not an easy situation.

With civil liability coverage, it is the insurer who will absorb the investigation and legal fees, totaling 240,000$, in addition to the insurance limits. On the other hand, with a 1M $ civil liability coverage, the assured personal account is reduced to 50,000$ – the difference between the third party claim and the insurance limit (1M $). Let us note that it is unlikely that the loss would be settled at the amount that the claimant is asking for, even if the latter could prove that the negligence of the insured is at the root of the loss of his chalet.

Civil liability guarantee has a great scope and is very versatile. We invite you to ask us more specific questions in the comments section.

Stay tuned for more precisions in future blog articles!

About the author
Jacques Bigaouette

Jacques is the Executive Vice President - Advisory Committee, Damage Insurance Broker at Lussier Dale Parizeau.

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