Final answer:
The common minimum liability insurance in most Canadian provinces is $200,000, covering the policyholder against claims for property damage or injuries caused by at-fault accidents.
Step-by-step explanation:
The minimum amount of liability insurance required in almost all provinces in Canada generally varies by province, but the common minimum is typically $200,000. This insurance is mandated to cover any property damage, injury, or death caused by a driver who is at fault during an accident. This form of insurance financially protects drivers against claims from other parties in the event of an at-fault collision.
An example to illustrate how automobile insurance works can be seen where we divide 100 drivers into three risk categories. Should accidents occur, the total damage incurred by these accidents would be calculated, and it highlights the principle that the average person's insurance premiums must cover their claims, the insurance company's operational costs, and allow for company profit. Thus, the average cost of coverage is arrived at by pooling the risks and expenses across all insured drivers.