Third Party Insurance - Definition, What is Third Party Insurance, Advantages of Third Party Insurance, and Latest News - ClearTax (2024)

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Third Party Insurance - Definition, What is Third Party Insurance, Advantages of Third Party Insurance, and Latest News - ClearTax? ›

Definition of third party insurancee

Third-party insurance, which is also sometimes referred to as 'act-only' insurance is a statutory requirement for all vehicle owners as per the Motor Vehicle Act. It is a type of insurance cover where the insurer offers protection against damage to the third-party vehicle, personal property and physical injury.

Third-party insurance generally comes in the form of liability insurance, or casualty insurance, and covers instances of bodily injury or property damage. Two common types of third-party insurance policies are homeowners insurance policies and auto insurance policies.

For example, personal liability insurance pays out if you cause damage or injury to someone else in any way other than with a motor vehicle. Third-party insurance pays out for any damage or injury that you may cause to someone else with your car.

First-party insurance covers the damages or losses caused to the policyholder or his/her vehicle. Covers the damages sustained The damages can be sustained during riots, strikes, earthquakes, floods, fire, theft etc. Third-party insurance covers damages or losses caused only to the third party due to an accident.

A third party is a person unrelated or disconnected to the insurance policy who may bring a legal liability claim against the first party. In turn, the first party, when sued by a third party, would then report the claim to the second party as the insurer providing protection to the first party.

A third party is someone who is not one of the main people involved in a business agreement or legal case, but who is involved in it in a minor role.

Third-party payers fall into several broad categories. The main types include health insurance, government agencies, employers, and health maintenance organizations.

An Example of a Third-Party Claim

Another driver runs their stop sign and hits you. You have vehicle damage, a broken arm, and whiplash. The other driver has an insurance policy that covers liability for physical injuries, including medical expenses, and property damage.

The term third-party liability can also refer to an agreement between two or more parties in which one party agrees to indemnify the other in the event of liability for damages or losses caused to a third party. This type of agreement is commonly used by businesses to protect themselves from potential liability.

What does third party insurance cover? ›

Third party

This is the minimum legal requirement and covers you for damage to someone else's vehicle or property or injury to someone else in an accident. This includes accidents caused by your passenger. It doesn't cover repairs to your own vehicle.

Will a Third-Party Claim Affect My Insurance? Typically, third-party claims are separate from your insurance. If you are worried about your premiums being affected, you can file the third-party claim directly with the insurance company of the person at fault.

What is a third-party claim? A third-party claim is a claim filed by someone other than the policyholder or insurance company. If you're in a car accident that someone else causes, you can file a third-party claim with the other driver's insurance for your covered accident-related expenses.

Benefits of Third Party Car Insurance Policies are:

Third party car insurance policy covers the insured person's legal liability in case of death or disability to any third party, and any loss or damage to a third party property. The legal and financial burden is taken care of in such a scenario.

Alternatively, if another driver is at fault and they have adequate insurance, you would submit a third-party claim to their insurance company. However, there may be instances where you could file both types of claims.

Third Party Owner means any person who is the legal or beneficial owner (including a Lessor) of any Assets used or occupied by, or in the possession of the Deed Company as at the Appointment Date.

Own Damage Insurance provides coverage for damages to your insured vehicle. It includes accidents, thefts, natural calamities, and man-made disasters. Third-Party Insurance covers the liabilities arising from damages to third-party vehicles, property, or bodily injuries caused by your insured vehicle.

Third-party health insurance is defined as insurance coverage in which a third party, namely the insurance company, pays the actual provider of healthcare services for services rendered to the employee.

A third-party transaction often involves a seller, a buyer, and an additional party not connected to the others. Examples of third-party transactions are everywhere in daily life, including Insurance brokers, mortgage brokers, and online payment portals.