Auto insurance helps protect a car against accidents. Some types of insurance protect against a wide number of events, including comprehensive and collision perils. Different states require different types of auto insurance according to state law. Third party insurance is a specific form of coverage that is often required by these laws, and helps cover damages to people involved in an accident.
What It Covers
Third party insurance covers damage, especially injuries, that drivers and passengers in other cars may have suffered as a result of an accident. This insurance kicks in when a policy holder is held responsible for the damage. It is referred to as third party insurance because it deals with third parties -- drivers and passengers not at fault for the accident, but injured because of it. In addition to covering injuries, it will also help pay for legal fees if any legal actions result from the accident. Fire and theft insurance are often included with third party car insurance as a package.
What It Does Not Cover
Third party insurance does not cover the policyholder's car or the policyholder's injuries. Other types of collision insurance are available in situations like these, but they come with extra costs.
Third party auto insurance is divided into three different numbers on insurance policies. The numbers are split, as in 200/200/100, or $200,000, $200,000, and $100,000. The first amount is the amount of coverage that pertains to each third party passenger. The second number is the maximum amount of coverage per accident -- once that amount is reached, the insurance company will refuse to pay any more. The last number is the maximum amount the insurance will cover for any property damages involved in the accident.
Third party car insurance is required in order to legally drive. While states make their own decisions about insurance requirements, all states have uniformly required that drivers show proof of third party insurance. Drivers may not need other types of insurance, so the premium of the third party insurance can be the least expensive auto insurance option.