What Is Third Party Liability Auto Insurance?
There are two parties involved in a typical insurance contract. The insured is the person or entity that is provided the protection, and the insurer provides the insurance coverage. A third party is someone who suffers injury or damage as a result of the actions by the insured, which is what third party auto insurance covers. It differs from first party coverages, such as comprehensive or collision, in that the insured is not compensated for the loss.
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Purpose
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Third party auto insurance is designed to make an injured party "whole" as a result of a covered accident. Damage to vehicles an other property can be expensive to repair or replace, as can the cost of medical needs resulting from an accident. If the responsible party does not carry adequate coverage, the injured party would have little choice but to pursue a lawsuit.
Need
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Third property coverage is essential for anyone who drives a car. Even if you are a safe driver, it is still possible that you could cause an auto accident. Without adequate coverage, you could be responsible to pay hundreds of thousands of dollars in damages to a third party. Third party liability coverage assumes that risk for you.
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Types
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There are two types of third party liability insurance: property damage and bodily injury. Property damage coverage will pay out in the event that you cause damage to another person's vehicle as a result of an accident, for example, while bodily injury coverage will be paid to an individual who is hurt as a result of an accident that you cause. Nearly all states require that you carry both of these, although the minimum amount required will vary.
Examples of Payouts
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An example of property damage coverage shown on your insurance policy could be 50/100/15. This means it will pay up to $50,000 per person for injury or death, with a maximum payout of $100,000 per each occurrence. In addition, the policy would pay up to $15,000 to replace damaged property, such as if the other party's car was deemed a total loss. Bodily injury coverage could be 100/300, which means that an injured person could receive a maximum of $100,000, with a maximum payout of $300,000 per occurrence.
Purchasing Third Party Insurance
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Since the cost of auto insurance can vary greatly, it will be beneficial to obtain quotes from several carriers to find the best rate. Factors that will influence the rate include your age, gender, where you live, and your driving record. As a rule of thumb, it is a good idea to purchase more coverage than you think you may need to ensure adequate protection.
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