Have you recently noticed that most people are talking about third-party insurance, and here you are, wondering what third-party car insurance is? Auto insurance is a vast domain, and many aspects are considered and combined to make one insurance policy. Third-party auto insurance is, in essence, a form of liability insurance.
In the insurance world, a person who purchases an insurance policy from an insurance company is called the “first party.” The insurance agency is the second party, and the third party is the person whose car you have damaged. One of the most common types of car insurance is third-party car insurance.
Learn about third party insurance claims, personal injury protection, third party policy, state laws, what happens if a car hits, medical bills, and what all third party insurance covers in 2023.
Third Party Car Insurance: Overview [2023]
Third-party car insurance, also called liability insurance, is a category of car insurance that compensates for the damages a driver causes to others. The affected party files a third-party coverage claim with the insurer of the other party to draw on their third-party insurance coverage to help pay the claim.
There is basically two third-party coverage, and they are:
- Third Party Liability coverage for property damage
- Liability coverage for bodily damage
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What Is Third Party Insurance For Car? How Does It Work In 2023?
Third-party car insurance is when an insurance company compensates you for the harm you may have caused to other people or their property, like their new car. For instance, Gavin has met with an accident, and it was his fault. Gavin then takes out a third-party insurance policy on her car, and the insurance agency will pay for it if he has signed up for third-party car insurance.
Let’s also suppose Gavin is involved in a minor car accident and is again at fault. Gavin damaged the other person’s vehicle door, but his insurance policy included third-party auto insurance coverage. Therefore, Gavin’s insurance policy will pay for the harm done to the third party’s car door under the property damage liability coverage. If you think homeowners insurance will be responsible for paying for that damages, you may have to think again.
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Third-Party Insurance Limits [2023]
Third party insurance protects a driver in many cases, but it has its limits too. When buying an insurance policy, you must determine the coverage you need. There are two categories:
- Split Limit Policy: The policy will present a string of numbers like 20/55/10. The first number is the maximum amount that can be paid for bodily harm to one person per accident. The second figure represents the overall total payment cap for bodily injury per accident, and the third represents the overall cap for property damage per accident.
- Combined Single Limit: Under this policy, a single liability coverage limit is provided, and a person can divide it amongst various damages.
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Difference Between Third Party Car Insurance vs Third Party Liability Insurance
There is not much of a difference between the two terms. Third-party insurance is a type of liability insurance. Liability insurance offers protection from lawsuits brought about by physical or damage to property and the financial burden of defending the insured party in court. Automobile insurance is the most typical form of third-party insurance.
Most often, it is used interchangeably during the claims process.
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How To File Car insurance Third Party Claim? [2023]
The following is the procedure for filing a third-party claim in 2023:
- In case of a crash, contact your insurance agent. Collect the relevant documents like accident reports, photographs, and statements of individuals on the crash site.
- The affected makes a third-party insurance claim with the insurance agency of the person responsible.
- Once proven that you are at fault and responsible for the other person’s expenses, it is up to you to decide whether to file a claim for compensation for the damage to your car.
- The insurance company will prepare a quotation and pay the third-party claimant.
If the insurance policy covers the damage you signed up for, the claim will be set according to your payment limits. If not, you will have to pay from your pocket. It is always advisable to gather insurance information as well as the license details of the driver, irrespective of the magnitude of the accident.
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What Are The Benefits Of Third Party Insurance Of Car? [2023]
Among the many benefits offered by third-party insurance, the most significant is that:
- It provides coverage for personal injury protection or harm to the body, medical payments coverage, and property damage in the event of an accident.
- It also provides peace of mind because insurance secures your savings. According to the National Association of Insurance Commissioners, the average savings of a person taking out third-party insurance instead of more comprehensive coverage is 50%.
- Lastly, it also secures the policyholder’s finance against accidental risks. Therefore, you won’t have to spend money immediately from your pocket in case of any mishap.
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Different Types of Third-Party Automobile Insurance Explained [2023]
The two types of third-party automobile insurance are as follows:
- Property damage liability cover: This covers legal costs related to property damage coverage and expenditure resulting from loss or damages to property, like the car of the person injured in the crash.
- Bodily damage liability cover: In the case of Bodily injury liability coverage (BIL), the insurance agency pays for medical co, lost wages during recovery, and pain and suffering due to the accident.
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What Is Covered And What Is Not Covered In Third Party Car Insurance? [2023]
In the event of a mishap, third-party car insurance cover factors such as damage to the property and expenses for any bodily injury. Multiple things are not covered by third-party car insurance.
As mentioned above, this insurance compensates for damages you cause to another driver. Following are the situations where third-party insurance won’t be of any use to you:
- It will not protect you against harm not caused by a third-party driver.
- It will not provide compensation to those who do not have any insurance.
- Third-party insurance will not pay for damages caused due to natural disasters, vandalism, a hit-and-run case, or if you are responsible for damaging your car.
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How Much Does Third Party Car Insurance Cost? [2023]
Information made public by the National Association of Insurance Commissioners states that the average cost of third-party liability per month is $40.66, and the average cost per year is $487.88. Cost may vary depending on the driving history, repair shop estimate on repairing cars, accident report, location, and collision coverage the driver has taken. We recommend you compare multiple insurers’ rates before buying insurance, as it will help you save money.
Note: In New Hampshire, where you aren’t legally required to purchase this insurance, it can give you the peace of mind of knowing you’re protected if you’re at fault in an accident that causes property damage or injuries.
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Full Coverage levels vary by state; New Hampshire, Arizona, and Virginia are the only state that does not require at least minimum liability coverage to legally drive, but you are still required to provide proof of financial responsibility. Before purchasing insurance here, check the rules on the New Hampshire Department of Safety, Division of Motor Vehicles, and Arizona Department of Vehicle Insurance.
Which Companies Offer Cheapest Car Insurance For Third Party? [2023]
Auto-Owners and MAPFRE are two such insurance companies that provide third-party insurance at an affordable price. The average monthly cost is $30 less, but they do not conduct operations in all the states across the US.
Third-party insurance is mandatory in every state. Therefore, all major insurance companies like Allstate, State Farm, GEICO, and Progressive offer third-party insurance to customers. USAA is the least expensive for military families, and GEICO is the cheapest for most people.
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Bottom Line
When talking about the third-party insurance claim, it is provided coverage based on the client’s age, gender, location, and so on. It gives medical coverage if you have any physical injuries, and it gives property damage liability and much more. Just make sure you read the fine print because it is best to find ways to pay less and get the maximum possible coverage in auto insurance.
Frequently Asked Questions
At-fault vs no-fault third-party claims: What is the difference?
In an at-fault state, the driver responsible for the accident compensates the affected party for the damage. On the other hand, if you need compensation for your losses in a no-fault state, a claim has to be filed with the insurance agency.
What if you’re in an accident with an uninsured driver?
In the event of an accident in which the driver of the other vehicle was uninsured or underinsured, you must use uninsured or underinsured motorist coverage. Although it is mandatory to have insurance, some people prefer not to sign up for it. At certain times, many people have a very low policy limit. In that case, you can reach out to your agent for compensation and file a claim.
Is third-party liability insurance included in my auto policy?
Yes. Third-party liability insurance is included in a person’s car insurance policy.
How does third party liability insurance for rental car work?
If you rent a car, purchasing it from a third party is less expensive than purchasing it separately from the insurance company.
What are the benefits of Third party auto insurance?
According to the statute, drivers should have minimal bodily injury insurance. Some states don’t require them, and others have additional restrictions. Generally, each state defines the minimum required for each coverage category. Even in the absence of fault states, liability coverage remains very important. No-fault laws have been introduced to help reduce or eliminate ordinary injuries cases affixing low-priced prices and overwhelming numbers of claims. Currently, no liability laws are in place, and wrongful death claims are costly lawsuits.
Is physical damage to your own car covered?
Unless another driver was at fault and was insured, you won’t pay the cost of repair a damaged car. Insurance will be given to third parties only and not to anyone else. If you crash without another driver involved (e.g. if you fall into a tree or fall off the highway).
What is not covered by third party insurance?
It should be known that liability insurance is intended for another party and does not cover the first party covered by the liability insurance company.
Are uninsured motorist collisions covered?
Unfortunately, none of the drivers have insurance. Several have no insurance. In the event you get hit by a car, you’re not able to get insurance.
