What Is Third-Party Car Insurance?

No one wants to have to pay a claim out-of-pocket, this is the purpose of auto insurance. In my nine years of insurance experience, I have assisted shoppers like you understand that expenses like property damage and medical expenses can be covered with the right insurance policy. Let’s explore how you can be covered under third-party insurance.

How Does Third-Party Insurance Work?

Third-party insurance is liability insurance that will cover claims that result in an auto incident. After the incident, you will file an insurance claim with the other driver’s insurance company. If they are found at fault, they will pay for your repairs, medical costs, and other expenses.

Coverage will be determined by the state you live in and whether it is an at-fault or no-fault state. Third-party pertains to liability only coverage, this includes bodily injury and property damage.

Bodily Injury

Bodily Injury covers the other driver and their occupants in the incident. This includes their medical bills, lost wages, and legal fees. Should the incident result in a death, BI coverage pays funeral expenses.

Property Damage

Property damage will cover losses to the other driver’s vehicle. It will also cover damage to structures such as homes and sheds, and other items such as trees and landscaping.

When filing a third-party claim, you provide their insurance company with the details of the incident.

• Get details early. Make sure you know dates, times, and witnesses if possible. Even weather conditions can be important to your case.
• Contact the third-party insurance company and file a claim.
• Get your estimates. And medical expenses, if applicable.
• The third-party insurance company will most likely ask for an inspection.
• Receive your settlement after adjusters make their determination.

At-Fault Vs No-Fault

In an automobile accident, there are two ways a claim can go when you file. Either you can be found at fault, or the other driver can be found at fault. Where the difference lies is in how medical expenses are handled.

There are twelve states that are no-fault:

• Florida
• Hawaii
• Kansas
• Kentucky
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Pennsylvania
• Utah

No-fault Insurance

In no-fault states, each driver is responsible for their own medical coverage. They must carry a minimum amount of Personal Injury Protection (PIP) depending on the state they live in. This will cover medical expenses after an incident, regardless of fault. Then the other driver’s property damage will pay for damages to the vehicle.

At-fault Insurance

In at-fault states, the driver who is found at-fault in the collision is responsible for both the property damage and medical expenses. Both insurance companies investigate and decide who is responsible. Sometimes it could be shared responsibility. At-fault is usually only a factor in accidents with injuries.

Example Scenario

Third party insurance helps both parties. It can allow the driver to recover damages and, if applicable, medical expenses in an accident that was not their fault. It can also assist the at fault driver pay those expenses without having to pay out-of-pocket. Let’s take a look at this from a driver’s point-of-view:

Let’s say a driver was stopped at an intersection to make a left-hand turn. Another driver was distracted by something in the car and rear-ended the first driver. The accident causes damage to the stopped driver’s truck and injures their back.

If the accident occurs in a no-fault state, the driver of the rear-ended truck will file a third-party claim for their damages, and then their own personal injury protection would cover their injuries.

If the accident occurs in an at-fault state, and the investigation determines the distracted driver was at fault, they will pay third-party property damages as well as for the truck driver’s back injury.

How Much Does Third-Party Insurance Cost?

Third-party insurance is at its heart liability-only insurance, covering Bodily Injury and Property Damage. In most states this type of policy is inexpensive. The cost can vary when you add additional coverage such as Collision and Comprehensive, or if you are carrying a lease and require Full Coverage.

Third-party insurance costs will depend on your location, the type of vehicle driven, and coverage level selected. Each state has its own standards, and thus its own costs. The average cost for 3rd-party auto insurance can be from $303 in Wyoming, up to $2,409 in New York.

Claims Process For Third-Party Car Insurance

After an accident, regardless of who is at fault, there are always pertinent steps to follow to file a claim. For a third-party claim follow these steps:

Collect As Much Information As You Can.

Remember details are important to insurance companies.

• Names, contact information, and insurance information of the other driver.
• Vehicle information, make and model, year if possible.
• Details of the location including street name, intersection traffic signals, and lighting.
• Weather details, this would include street conditions.
• Photo of damages, include tire marks if there are any.
• Who was at fault; this is not a blame game, go by police report/findings.

Get A Repair Estimate

Do not settle for just one. Insurance companies look for at least three estimates. It may help to talk to the third-party insurance company about approved providers instead of using your own repair shop.

Contact The Insurance Company

If the incident wasn’t your fault, contact the other party’s insurance company to file a 3rd-party insurance claim. Ensure you are filing within the insurance company’s deadlines; delays can result in denials.

Benefits Of Third-Party Insurance

One benefit of third-party insurance is that it keeps you compliant with laws mandating that everyone carries third-party insurance.

Also, if you are in an auto incident you will be able to pay for third-party damages that would otherwise come out of your pocket. If you live in an at-fault state, it will also pay for medical expenses.

Who Needs Third-Party Insurance?

If you drive an automobile, you need third-party insurance. However, many still fail to carry basic coverage. According to the Insurance Information Institute (III), 14% of drivers choose to go uninsured. This can leave many on the hook for repairs and injuries if they are ever in an accident whether they or a third-party was at fault.

Third-party insurance is mandated in all but two states, New Hampshire and Virginia. While not mandatory, a driver still needs to provide that they do have coverage for an at-fault accident. And just because insurance is not mandated It would not relieve you of responsibility if involved in a third-party accident.

In addition to auto third-party insurance, homeowners and businesses have their own forms of third-party insurance.

Homeowners

This form of third-party insurance protects homeowners should someone injure themselves on the owner’s property. It can also cover you if you cause damage while at someone else’s home.

Business Insurance

If a customer were to suffer injury as a result of visiting a business or using their product. This could be a slip and fall, becoming ill, or advertising causing personal damage.

How To Buy 3rd-Party Car Insurance

Since auto insurance is mandated, when you purchase auto insurance, you will generally have third-party insurance. However, it is always best to read your policy carefully before making your decision.

Always ensure you are in line with your state requirements as not every state requires the same level of third-party insurance. If you move, checking your policy should be one of the first things you do.

Keep in mind that if you lease a vehicle, you will be required by the lender to carry full coverage. Third-party insurance is for the most part, liability only. Full coverage often includes third-party insurance. As with all insurance policies, coverage limits will vary by policy.