Understanding Auto Insurance: Third Party Benefits


third party auto insurance

There are two primary components to your auto insurance policy.

We at Crawford Yingling Insurance see time after time individuals and family who view automobile insurance as a commodity. We understand. Auto insurance isn’t exactly rocket science, but you should pay attention to certain coverage parts and the carriers as well.

Let’s talk about the policy structure first. For the sake of this blog we are going to have two parts of coverage 3rd party benefits (pay them) and 1st party benefits (pay us).

Third party benefits are usually listed first on your policy.

I will start with 3rd party benefits (although all carriers are different, 3rd party benefits are usually listed first).

First, you have bodily injury or property damage, which defends and protects you if you injure someone or multiple people in an auto accident, or the accident results in damage to someone’s property.When selecting the coverage you have two options: split limits or combined limits. When thinking about coverage levels, you will need to assess what you have “to lose”, if successfully sued for negligence. Examples of personal assets include, real estate, inheritance, life insurance policies, college savings, bank accounts, to name a few.

The second 3rd party coverage is Medical Payments, which are considered to be no fault coverage.

When selecting a limit for medical payment you might ask yourself, how frequently do I travel? Who usually is riding in my vehicle and how often? How well do I know the people riding in the vehicle and what might happen if they were injured? We have seen cases where friends are riding in a vehicle but Medical payments will pay for injured persons medical bills and is sometimes used to avoid litigation.

What Exactly is Third Party Auto Insurance?

When you purchase auto insurance, only two parties are involved in the transaction. You are receiving an insurance plan that provides protection, while the insurer provides coverage. A third party enters when someone is injured as a result of the insured party.

Accidents involving a third party are common occurrences and are typically resolved without much issue. However, if the party at fault does not have third party insurance, resulting in no coverage for the third party, then a lawsuit tends to ensue.

The Purpose of Third Party Auto Insurance:

This type of insurance covers a third party in the event of an accident. The insured, or responsible party, is able to provide coverage for the accident they cause. Third party insurance covers damages to vehicles and medical expenses for the third party that is affected.

Why Do You Need It?

  1. Just because you drive safely does not mean you can’t have an accident. In the event of an accident, you don’t want to be left personally responsible for compensation.
  2. If you don’t have third party coverage, you will most likely face a lawsuit.
  3. Lawsuits could result in tens, if not hundreds of thousands of dollars, depending on damage and injury.

Any person can be involved in an accident. No matter how safe you are, you may reach to grab your phone, change the radio or be distracted by the environment around you and cause an accident. We all have moments when we are unsafe while driving because we are not perfect drivers.

If you cause an accident, you will be expected to pay out large sums of money if you do not have third party coverage. Most likely, you do not have large sums of money sitting around to give to the third party, thus you need an insurance plan that protects you. Third party auto insurance does just that.

Two Types of Insurance:

For third party auto insurance, an insurer offers property damage and bodily injury coverage. These types cover the damage of a vehicle and the injuries sustained by the third party. Most states require drivers to have both when operating a vehicle.

Payouts vary per plan and provide levels of coverage for both property damage and bodily injury. Having some level of third party auto insurance is vital if you drive a vehicle. Again, you do not want to be responsible for paying out compensation on your own.

Purchase Coverage:

We understand you may have several questions regarding this type of insurance. Do not hesitate to speak with our team of insurance experts. We will discuss the insurance at length and help you determine the best coverage for you.

To learn more about third party insurance and how you can be covered, give us a call at (410) 848-7464.