Registered Insurance Brokers of Ontario (RIBO) Practice Exam

What benefits does Third Party Liability coverage provide to the insured?

1. Only property damage coverage

2. Legal and court costs beyond policy limits

3. Medical payments for the injured party

4. Repair costs for the insured's vehicle

The correct answer is: Legal and court costs beyond policy limits

Third Party Liability coverage is designed to protect the insured from claims made by others for damages they may have caused. This coverage primarily provides financial assistance in the event that the insured is found legally liable for injury or property damage to a third party as a result of their actions. It particularly encompasses the payment of legal costs, court fees, and damages awarded as a result of a lawsuit. Option B stands out as the correct answer because it directly addresses the legal and court costs that may be incurred. If the policy limits are exceeded, the insured might still be liable for these additional costs, underscoring the importance of having comprehensive coverage for both legal protection and associated costs. The other options do not encapsulate the essence of Third Party Liability coverage: - Property damage coverage is part of this liability, but it is not limited to that aspect alone. - Medical payments for the injured party are typically covered under separate provisions or specific medical payments coverage, not directly under Third Party Liability. - Repair costs for the insured's vehicle are generally covered under collision coverage or comprehensive coverage, not under the Third Party Liability framework. Thus, the focus on legal and court costs aligns perfectly with the protections offered by Third Party Liability coverage, reflecting the financial safeguards provided to the insured in