Third Party Insurance
Definition - What does Third Party Insurance mean?
Third party insurance is an insurance policy that covers property damage caused by someone who isn’t the insured. Most insurance contracts only involved the insured, the first party, the insurance company, and the second party. If another person, the third party, damages the insured’s property, a regular insurance contract wouldn’t cover the claim and would tell the insured to sue the third party instead. However, third party insurance would cover this risk and pay for the damages.
Insuranceopedia explains Third Party Insurance
Uninsured motorist coverage is the most common type of third party insurance. Normal collision car insurance only pays to repair damage if the insured caused the accident. If the other driver was completely at fault, the insured is supposed to collect payment from the other driver or their insurance company. If the other driver doesn’t have insurance or money, the insured would be stuck paying for the damages themselves. By getting third party insurance, the insured would avoid this problem.