Third-party insurance is a type of insurance policy that provides protection against claims filed against the insured by a third party. The first party is the insured, the second party is the insurer, and the third party is the person causing the loss or claim. Third-party insurance generally comes in the form of liability insurance, or casualty insurance, and covers instances of bodily injury or property damage. The following are some examples of what third-party insurance covers:
- Repair costs to damaged vehicles/property
- Legal fees
- Settlement costs
- Medical costs
- Costs resulting from injuries to a person, such as hospital care, lost wages, or pain and suffering due to an accident
Third-party insurance is found primarily in auto, homeowners, and business liability insurance policies. It is important to note that what third-party insurance doesn’t cover can depend on the specific policy type, but in general, this type of insurance doesn’t cover deliberate acts of destruction or injury on the part of the insured. It also doesn’t cover criminal actions.
