Third Party Insurance

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What Is Third Party Insurance?

Third-party insurance is an insurance policy purchased for protection against the claims of another. One of the most common types is third-party insurance is automobile insurance. Third-party offers coverage against claims of damages and losses incurred by a driver who is not the insured, the principal, and is therefore not covered under the insurance policy. The driver who caused damages is the third party.

Third-party insurance is essentially a form of liability insurance purchased by an insured (first party) from an insurer (second party) for protection against the claims of another (third party). The first party is responsible for their damages or losses, regardless of the cause of those damages.

There are two types of automobile third-party liability coverage. First, bodily injury liability covers costs resulting from injuries to a person. These injuries costs could include expenses like hospital care, lost wages, and pain and suffering due to the accident. Secondly, property damage liability covers costs resulting from damages to or loss of property. Examples of property damage include the payment to replace landscaping and mailboxes, as well as compensation for loss of use of a structure.