Third-Party Insurance: What is it and How Does it Work?
Shopping around for the right car insurance can be a challenge. Before you can even compare prices, you have to know which type of car insurance you need and whether it will provide adequate cover for your vehicle and personal needs for the year ahead.
In this article, we'll take a look at third-party auto insurance, how it compares to other types of auto insurance, who needs it and how to make a claim. We'll also give you advice on how to compare different policies so that you get the best bang for your buck and total peace of mind.
So, What is Third-Party Auto Insurance?
Also known as liability insurance, third-party auto insurance is required in most states. This type of insurance protects you if you need to pay damages to another driver because an accident was your fault.
The term "third-party" refers to all other drivers on the road. You are the first party and your insurance company is the second party. There are two types of third-party insurance available to vehicle owners: property damage liability and bodily injury liability:
- Property damage liability pays for costs you are ordered to pay as the result of damaging another person's property in a car accident
- Bodily injury liability pays for medical expenses if other drivers or passengers are harmed in the accident.
It is also important to know that third-party auto insurance does not provide any protection for injury to yourself or your vehicle.
Examples of Third-Party Auto Insurance Claims
Third-party auto insurance can provide cover for a wide range of scenarios. Here are just some incidents that might crop up.
- You skid on a patch of black ice while leaving for work and knock down your neighbor's fence with your vehicle.
- You run into another vehicle at a stoplight causing the driver in the other vehicle to suffer whiplash and significant damage to their vehicle.
- You accidentally back your vehicle into another vehicle when exiting a parking space.
Accidents happen, even if you have done your utmost to avoid and prevent them. These accidents can often result in lawsuits being filed against you which could have serious financial consequences. The right level of third-party or liability coverage will ensure you are not left out of pocket if the unexpected happens.
Who Needs Third-Party Auto Insurance?
The short answer is practically everybody who drives a car. It is a requirement in most parts of the United States for all vehicle owners to have third-party auto insurance in place. In states that don't specify a minimum coverage, you will usually need to arrange insurance yourself and provide evidence to the state that you have sufficient coverage in place to cover damages in the event of an accident.
How Does Making a Third-Party Insurance Claim Work?
The process involved with making a third-party coverage claim will depend on whether you were the victim or cause of the accident.
If you are at fault, you will need to file a police report in the first instance and document as much as possible about the accident. If you dispute that you were at fault, having as much information as possible will help to support your case. Be sure to also take a photograph of the insurance card and driver's license of the other party. It is the responsibility of the other party to file a claim against your car insurance. If you are found to be at fault and costs are paid to the other party, you may find that your insurance costs will go up as a result.
If you need to make a claim yourself as the victim of an accident, you will need to contact the other party's insurance company. To file your claim, you will need to have the insurance details (name and policy number) of the other party to hand. You may also be asked for the contact details of other passengers in the car, a police accident report and details of any medical issues you or your passengers suffered and any damage caused to your vehicle. Photos of injuries and damage will also help to support your case.
What Third-Party Insurance Doesn't Cover
As we briefly touched on above, it is important to understand the limitations of third-party auto insurance. Any damage to your property, to you or your passengers, will not be covered by your third-party insurance policy. To provide this cover, you will need to take out a comprehensive and/or collision coverage policy. Also known as first-party insurance, a collision coverage policy will provide cover for your own vehicle in the event of an accident. Comprehensive insurance provides coverage for theft, damage or weather events. Most states don't require that you take out first-party insurance, but it is recommended if you want to protect yourself and your assets.
How to Get the Best Deal on Third-Party Auto Insurance
Now that you have a better idea about third-party auto insurance and how it works, it's time to start shopping for the best deal and policy to suit your needs. At Autoinsurance.com, we make the process quicker and more convenient than ever with our powerful comparison engine and access to some of the best deals on the market. Visit our website now to compare quotes from hundreds of providers in moments.