What is Third Party Auto Insurance?
Third party insurance coverage may sound complicated, but it’s actually the most commonly required form of car insurance in the United States.
Third party car insurance, also known as liability coverage, is pretty simple to understand once you know what the “third party” part stands for.
When you speak about yourself, you are said to speak “in the first person.”Likewise. in car insurance, the person or organization purchasing car insurance coverage is the first party. The insurance company you buy insurance from is the second party.
So where does the third party part come in? Well, if you are liable in an accident, you might hurt another person or their property, and that’s the third party in this situation.
There are two main types of third party coverage, and they cover both other people and their property. Property Damage Liability (PDL) insurance covers stuff, and Bodily Injury Liability (BIL) covers people. PDL covers things like replacing or repairing another person’s car, home, or even land (such as if you accidentally knock a telephone pole down into someone’s yard and professionals need to haul it away). BIL coverage will provide for medical bills, funeral expenses, legal costs, and even lost wages.
Do I Need Third Party Coverage?
In most states, the answer is yes. In states that do not require minimum coverage, you’ll likely need to self-insure and provide evidence to the state that you would be able to pay for damages in the event of an accident.
But really, why risk a fortune that you could be forced to spend if you are unlucky enough to cause a serious accident?
Third Party Coverage Claims
The claims process for third-party coverage depends on whether you caused or were the victim of an accident.
If you caused the accident, be sure to file a police report and document as much information as possible about the accident. Be sure to also get a photo of the driver’s license and insurance card of the other party. The other party will be responsible for filing a claim against your car insurance. Your bill may go up depending on the severity of the accident and whether or not you have accident forgiveness.
If you are the one making the third-party claim, you would better hope the other party has insurance – otherwise, you may have to sue them for damages. If you are in an accident that is someone else’s fault, you still need to be sure and swap car insurance information with the other person and get their contact info. If they have car insurance, you will need to file a claim with their insurance company.
In order to file a claim, the claims rep will ask you for the at-fault driver’s information (name and policy number), contact info for any of the passengers, an accident report from the police, and detailed information about any medical issues or repairs on your vehicle that you’ve already paid for. Photos will come in handy here, too.
If you live in a no-fault state, you may have to use your own coverage for medical bills, but you will still file a property damage claim with the other party’s insurance.
What Third Party Coverage Does Not Include
Any damage to you, your passengers, or your property won’t be covered by BIL or PDL insurance. To cover yourself, you will need first party coverage. There are several types of first-party coverage. To protect your vehicle, you will need comprehensive and/or collision coverage. Collision coverage provides for your own vehicle in the event of an accident, and comprehensive coverage protects against the other stuff: Theft, or damage, or a weather event. To protect yourself, you will need personal injury protection (PIP), which pays medical bills in the event of an accident, and uninsured motorist coverage, which covers your bills if a driver without car insurance causes an accident.
Most states don’t require first-party insurance coverage, but it is always a good idea in order to protect yourself and your investments.