Before we define absolute liability, let’s quickly review what liability means.
Liability is a term used to describe someone’s legal responsibility to compensate another party for harm caused. When you act recklessly or carelessly (known as negligence), you can be liable if those actions cause harm to someone else. Damages resulting from negligence are covered under liability insurance. When you’re legally liable, your insurer would indemnify the victim for any bodily injury or property damage they suffered.
For example, if you negligently back into someone’s car and cause damage, you’ll be liable for their repairs. In car insurance, liability is closely related to fault. Your insurer has a legal responsibility to compensate the other driver for the harm they’ve suffered.
Liability is enforced legally by a court of law. To be legally liable for something, it must be proven that you intended to cause harm, or that the resulting harm happened out of negligence — a failure to take reasonable care.
Absolute liability is an even stricter form of liability. It usually applies when something that poses a serious risk causes harm to someone else. If the legal process finds you absolutely liable, you’re fully responsible, even if it wasn’t your intention to cause harm, you were negligent when it happened, or you took reasonable measures to avoid it.
For example, if you have an exotic pet, like a snake, and it bites someone else and injures them, you could be absolutely liable, even if you took reasonable precautions.
The legal process only considers the fact that the harmful act occurred and that you (the insured owner of the snake) were involved in some way, it doesn’t consider your intention to prevent it.
Absolute liability falls under the category of regulatory offenses, or public welfare offenses. These offenses are typically associated with activities or situations where ensuring public safety is paramount. Another common regulatory offense is that of strict liability. In a strict liability situation, you can argue that you took reasonable care to prevent harm. Absolute liability however does not allow for such a defense.
These regulatory offenses are also distinct from criminal law, where criminal acts are considered mens rea offenses. A mens rea offense typically requires proof that the at-fault person acted in a guilty state of mind. This means the person intended to cause harm, knew about the consequences and was willfully blind, negligent, or reckless — essentially acting unreasonably.
If you’ve purchased insurance before, you’ve come across the term liability.
Home insurance policies usually include personal (or third-party) liability and premises liability. You’ll also see third-party liability coverage appear in all car insurance policies — it’s a legal requirement to drive a car in Canada.
But here’s the difference: absolute liability is a legal concept, not a type of coverage offered through insurance. When a case involving absolute liability goes to court, the court’s judgment confirms the existence of harm and establishes who’s entitled to indemnity. It’s almost always the at-fault’s insurer that will pay the victim, even if they deny coverage to the insured (more on this below).
While the scope and application of absolute liability may vary between some jurisdictions in Canada, the general idea is mostly the same.
As mentioned, absolute liability applies when a person has absolute responsibility for causing harm to someone else. In most situations, that usually occurs after one commits a crime or is involved in an inherently dangerous activity. The intention or degree of fault does not affect whether someone is absolutely liable; what matters is the action itself.
Absolute liability often applies in car insurance, where third parties don’t have a way of proving if the damage resulted from reckless or negligent driving. It’s also difficult to prove or justify the driver’s intention to cause harm, which means the liability of the driver may not align with the third party’s rightful compensation 1 .
Under the auto insurance section of the Ontario Insurance Act, absolute liability applies when the insured:
If the legal process determines you meet one of these conditions 1 , you’ll be absolutely liable for the harm you caused.
Unlike in liability insurance where you can actually prove lack of fault or deny negligence, arguing against absolute liability is much more difficult. To avoid absolute liability, you’d likely need to prove any of the following:
That said, there may be additional defenses depending on your specific jurisdiction. If you find yourself in a case involving absolute liability, it may be best to consult with a legal professional for advice on how to proceed.
When absolute liability applies, it can override any policy conditions or exclusions imposed by your insurer. An exclusion is an event not covered by insurance.
If the legal process finds you absolutely liable in a car incident, it’s still your insurer’s responsibility to indemnify the other driver, even if it resulted from an exclusion or something they denied coverage for.
For example, many car insurance policies exclude coverage in situations where an unlicensed insured gets into an accident. If the legal process finds the unlicensed insured absolutely liable, the insurer has to compensate the other injured driver, even though the exclusion exists.
However, just because your insurer paid the compensatory damages doesn’t mean you’re off the hook from facing additional expenses. Once you breach the terms of your policy, your insurer may choose to take legal action against you to recover the damages paid to the other driver. In this case, there’s no insurance to cover you; you’d have to pay entirely out of pocket for those costs, as well as any legal costs you incur in the process.
In most provinces, drivers must carry a minimum coverage limit of $200,000 for accidents involving bodily injury and property damage. If both bodily injury and property damage occur in a single accident, the minimum coverage is distributed as follows 2 :
Insurance providers also offer optional coverage options above $200,000. Minimum coverage might not be enough in all situations, so most drivers opt for at least $1–2 million.
If you are at fault for an accident, and the legal process finds you absolutely liable, your third-party liability coverage would respond to compensate the injured third party. This is the coverage that protects others (third parties) when you’re found liable for causing damage. In this case, third-party coverage will pay for any injuries or car repairs incurred by the other driver, up to the limit specified on your policy.
Example
John is driving his car when he accidentally runs a red light and collides with Sarah’s vehicle. Sarah sustains injuries requiring medical attention, and her car suffers significant damage. Little did she know, John’s driver’s license was suspended a few weeks prior.
Sarah files a claim against John’s insurance. However, during the investigation, it is discovered that John was driving without a valid license. This constitutes a breach of the insurance contract. The legal process determines John has absolute liability, even though he negligently ran the red light and didn’t intend to harm Sarah and her car.
Scenario 1: Damages fall within the policy limit
Sarah’s medical bills amount to $20,000, and her car repairs cost $10,000. John’s third-party liability coverage is $200,000. Despite the exclusion for unlicensed driving on his policy, John’s insurer is obligated to cover the total damages of $30,000 that Sarah is entitled to due to the absolute liability clause.
Scenario 2: Damages exceed the policy limit
Sarah’s injuries are severe, requiring ongoing physiotherapy and rehabilitation. Her medical expenses total to $250,000, and her car is a complete write-off, valued at $50,000. While John’s third-liability coverage will pay up to the $200,000 policy limit, John is personally liable for the remaining $100,000.
Apart from these financial penalties, absolute liability offenses may also lead to restrictions on business activities when harm is caused by dangerous or hazardous operations. While absolute liability rarely results in imprisonment, jail time may apply for an offense involving strict liability.
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Sources
About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.