What is Third Party Liability Insurance?
When an accident occurs and an insurance claim is filed, three parties can be involved in the process. The first party in the situation is you as the policy holder. Your insurance carrier is the second party. If your accident involved another person, such as a driver of another vehicle in the case of a car accident, that person is the third party. Therefore, third party liability insurance is essential in order to protect you if another party makes claims against you.
Function of Third Party Liability Insurance
The main function of this type of insurance is your protection if you are involved in and cause an accident. These accidents can occur at you home, when you are behind the wheel of your car, or at your place of work. Liability coverage works to reimburse others by paying for damages that have been awarded during a lawsuit. The amount reimbursed will depend on the limits set by your insurance company, and in some instances, the outcome of a court case.
Types of Third Party Liability Insurance
Third party liability insurance is available in multiple areas. Automotive liability insurance is extremely important, as it will pay for property damage and car accident injuries. A homeowner’s liability insurance policy will take affect if a person is injured within your home and needs to see an Atlanta chiropractor. Additionally, commercial liability insurance will cover you if someone is injured regarding your business operations.
If you have a high risk of liability, you may need to take out additional coverage other than the standard coverage that your primary policy offers. If this is your situation, you may wish to purchase what’s known as an umbrella policy. This policy will be effective if your primary policy limits have become exhausted as outlined by the Insurance Risk Management Institute.