In an insurance party, each person or entity has a specific role and definition. These roles are known as parties of interest. The first party is the insurance company, the second party is the insured individual, and the third party may be a person who was hurt in an accident with the insured party but is unknown to the Insurance company. Third-party insurance is also known as liability insurance that covers a third entity that is neither the insurance company nor the person paying for the policy.
A liability insurance policy is designed to cover the court cost and personal liability claims that may be filed against a first party policyholder. This is a legal contract between the insurance company and the policyholder that is designed to protect the personal assets of the policyholder. Third-party insurance pays a person hurt during an accident who has no affiliation with the insurance company.
There are many types of third-party insurance plans. These policies are designed to protect a person against damages that may occur during an accident or personal injury claim. Typical policy plans include automobile insurance, homeowner's insurance, and blanket person liability protection. All of these insurance policies have a specific agreement on how third-party claims will be handled.
Third-party insurance is designed to cover the expenses for both bodily injury and personal property damage caused by the insured person's negligence. This amount is determined by the amount of third party liability coverage defined in the policy. Insurance companies are only obligated to pay the maximum amount defined in the policy, even when the cost of damage is higher.
It is important to determine how much third-party insurance is necessary before shopping for an insurance policy. This coverage typically affects the cost of the policy, as well as the protection it will provide. Having a policy with too much coverage can make insurance extremely expensive and is typically unnecessary.
A liability umbrella insurance policy is a form of third-party insurance. This policy protects an insured person from lawsuits that may be claimed by an unknown third party. Liability coverage is blanket insurance coverage that protects personal property from being taken during a legal settlement. This type of insurance policy is typical purchased by managers and business owners that are at risk for being sued by customers or employees.