Types of Third Party Insurance

Types of Third Party Insurance
••• David De Lossy/Photodisc/Getty Images

When purchasing an insurance policy, you often think about protecting yourself and your possessions. Insurance offers you a way to pay expenses for repairing damage to your car or replacing lost belongings in your home, but you also need insurance coverage in case of damages or harm involving other people. The other person becomes known as a third party.

At-Fault Drivers

When you file an accident claim, you are the first party protected by the second party, the insurance company. The third party would be another motorist. You usually have your insurance company cover damages to your car. When the other driver is at fault, you deal with the third party’s insurance company. This avoids rate increases to your policy, especially since you were not at fault. Dealing with the other person’s insurance company might take longer because the company is looking out for its best interest. It might try to stall payments, so you need to stay in contact with the company to receive your proper compensation.

Injuries at Home

You get renters insurance to protect damaged or stolen possessions in your rental unit. The landlord or property owner has insurance for structural damage, not necessarily for your belongings. Renters insurance can also offer coverage if someone gets injured in your rental home. This pays for the third party’s medical bills or protects you if the third party files a lawsuit against you for the injury.

Business Liability

Business owners need liability insurance to protect them when accidents occur on their property or if someone sues them for certain practices. Insurance policies protect their employees, but also people outside of their company. A customer or vendor might slip and fall or suffer injuries from another type of accident, so the insurance covers that third party for medical costs or against lawsuits. Third party insurance available for businesses also includes coverage for legal costs against discrimination or harassment charges.

Health Insurance Procedures

Health insurance works a little differently when it comes to third party insurance. When you get health insurance as the first party, the second party becomes your physician or the hospital when claims are made. The insurance company becomes the third party when it pays the medical expenses to the doctor or medical facility. This depends on your insurance policy. In self-insurance plans, your employer pays your medical costs from a company fund. With supplemental health coverage that protects you from accidents or certain illnesses, the insurance company usually pays you directly so you can pay for medical treatment.