What Is Third-Party Car Insurance?

Third-party car insurance is when you file a claim with another person’s insurance provider to pay for your car repairs, medical expenses, and related transportation while your car is being repaired. You’d file a third-party claim if you got into an accident and were not at fault. If the accident was your fault, the other person would contact your insurance provider for a payout.

Who Are the Parties?

If your insurance provider is paying the claim, you are a third party, and the party being paid is the first party. Vice versa if you are the party not at fault who is receiving the money from the third party.

Third-party car insurance doesn’t cover everything, even if you were found completely not at fault in an accident.

What It Covers

• In at-fault states: In at-fault states, if you’re found at fault for an accident, you’ll have to pay the other party’s medical and property damage costs.
• In no-fault states: In no-fault states, you’ll only have to pay the other person’s property damages (more on this below). Each party’s insurance pays for their own medical costs.
• Lost wages and other economic damages

What It Doesn’t Cover

• Theft
• Vandalism
• Weather-related events
• Potholes

In other words, third-party liability insurance doesn’t cover what comprehensive insurance does, which includes damages to your car from everything but other cars.

Confused? We’ll break down the third-party car insurance claims process from start to finish, starting with filing a claim.

Third-Party Car Insurance Claims

1. To file a claim, contact your insurance provider and give them the accident details. You’ll want a police report in your claim, so it’s important to call the police after getting into a car accident, regardless of who was at fault.
2. Your insurance provider will contact the other person’s insurance company and help you file a claim with it.
3. To determine who was at fault, you’ll work with either a claims representative or insurance adjuster, who will gather information about the accidents from both parties. They also will inspect the vehicle, whether in person or in photos, along with the police report.
4. The adjuster will determine who is at fault, and the person found at fault will pay for the other person’s medical and/or property damage costs, depending on the state.
5. The third-party insurer will either reimburse the first party for their expenses or pay a repair shop directly.

If you have property damage and/or bodily injury coverage, you already have third-party insurance coverage and may not even know it. Your state may even require it. Of course, the cost of third-party auto insurance is as varied as the cost of auto insurance in general, depending on factors such as your driving history, type of vehicle, and number of coverages.

Still, if you get into an accident and it’s not your fault, you’ll be grateful for third-party insurance, especially if you live in an at-fault state. This type of insurance will give you peace of mind in the form of property damage and bodily injury liability coverage.