6 Things You Didn’t Know About Third Party Insurance Policies
Third-party insurance policies are something few people think about. It’s something you’ll be grateful to have — or wish you had — when something happens and you understand why they’re necessary.
First Party Insurance Policies
Most of us are familiar with what is termed “first-party” insurance. It’s purchased by an individual or a business entity to protect against unforeseen calamity. Examples include:
- Home or other property insurance.
- Health insurance.
- Life insurance.
Third Party Insurance Policies
Third-party insurance policies are purchased by an individual (first party) from an insurance company (second party) to protect against the legal actions filed against you by someone else (third party) (definitions courtesy of Business Dictionary). A more familiar term for “third-party insurance” is liability insurance.
Examples of third-party insurance include:
- Workers compensation.
- Malpractice insurance.
- Employment practices insurance, which covers claims such as wrongful termination.
Homeowners and auto insurance policies generally contain elements of both first- and third-party policies.
What You Don’t Know
What you know about third-party insurance policies can help you — and what you don’t know can definitely hurt you.
- You (the first party) are financially responsible for your own damages, which means if someone slips and falls on your property and you hurt your back helping them up, you still have to pay for your own treatment as you normally would. And it won’t prevent the other person from filing a liability claim against you.
- Even if you’re not at fault in a car accident, you can be held liable. In this case, the liability part of your insurance policy can be invaluable.
- Bodily injury coverage, which is required in all 50 states, protects you from financial ruin if you’re found liable in an accident. This covers costs such as medical bills, loss of income, and legal costs.
- In a car accident, third-party insurance also covers damage to property other than cars, such as trees, fences, or even buildings.
- Do you rent your home or apartment? You still need a third-party insurance policy to cover the cost of your belongings if the dwelling is damaged or destroyed by events like fires or storms. It can also kick in if a visitor to your rented home is hurt while they’re there.
- There’s usually a limit to how much a third-party insurance policy will pay, so it’s important to read and fully understand it. You’re on the hook for whatever the policy doesn’t pay out.
Don’t be caught unprepared and uninformed. We can ensure your third-party insurance company lives up to its obligations. Contact us today.
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