Third Party

Updated: 03 January 2025

What Does Third Party Mean?

A third party refers to an individual or entity that is neither the owner of the insured assets nor the insurance company providing the coverage. Many insurance policies include third-party coverage, which protects an asset against damage caused by a third party. This type of insurance is commonly used in auto insurance.

Insuranceopedia Explains Third Party

Third-party insurance is commonly required for auto insurance because many accidents result in damage to vehicles caused by other drivers. This typically happens when someone else is responsible for causing an accident. In most parts of the United States, drivers are required to have third-party insurance to cover property damage and medical expenses they may cause to other people’s vehicles or bodies. However, it is often not mandatory for drivers to insure their own vehicles.

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