What Is A Third-Party Insurance Claim And How Does It Work?

Suppose you own car insurance that has been designed to safeguard you against the claims made by other drivers involved in an accident. This car insurance is categorized under a third party insurance claim. 

In general terms, it is a policy that is purchased by the first party or insured from the second party or the insurance company to seek protection from the third party or other person involved. 

It is sometimes also referred to as “act-only” insurance, which seeks statutory documentation for every vehicle owner. However, the policy does not have any coverage for the insurer. Let’s get in complete detail. 

What Are The Attributes Of A Third Party Insurance Claim?

Well, have you thought of how to distinguish a third-party claim from others? Here is a set of features that make the former a class apart from its various counterparts: 

1. Third-party claims provide a basic protection level to each policyholder. 
2. As mentioned earlier, it is also known as an act-only or liability-only policy. 
3. Further, it also safeguards against the lawful liability that might arise due to a third party’s involvement in a particular accident. Personal injuries, loss of life, and property damages are usually covered by the third party. 
4. Another significant attribute of such a policy is that it provides an affordable premium. 
5. It provides coverage for damages to property that have great valuation. 
6. Both online and offline procedures are followed for buying them. 
7. Lastly, third-party claims do not cover the damages caused to the insurer.

Read More: Insurance Claims – Meaning, Types, & How They Work?

How Does It Work?

Consider a scenario where the policyholder has met with an accident. Here, the insurer provides financial help to cover the cost of repairs for the third party’s properties. Not only does it reduce the economic burden of the policyholder, but it also informs the insurance company before the claim is filed. 

When a Third Party Insurance Claim is filed, a surveyor is appointed by the insurer to assess all the damages. Next, he has to verify the estimated repair costs. After the completion of the verification, the insurer sits down and settles the claim. 

In the case of auto insurance, two categories of liability coverages are included: 

Liability For Property Damages –

Coverages for resulting damages or the loss of a property, like replacing mailboxes and landscaping. It further includes compensation for the loss of a used structure.

Liability For Bodily Injuries –

Coverages for personal injury, hospital care, pain or suffering, and lost wages caused during an accident.

Significance Of Third Party Insurances

1. It goes beyond saying that such a claim is a mandatory requirement that has been reinforced by law. Hence, a third-party cover lets the policyholder comply with all legal obligations. 
2. Secondly, being a basic coverage alternative- it provides peace of mind to the policyholder. They can rest assured about having adequate economic protection against the damages incurred to other people by them, knowingly or unknowingly. 
3. A third-party motor claim safeguards the finance of the policyholder against accidents and associated risks. 

To comprehend this insurance cover, the foremost step is to make a note of the used terminologies. Some common terms that one might find across a third party insurance claim are:

• First-Party or the policyholder who buys an insurance policy. 

• Second-Party or the insurance company, preferably the insurer.

• Third-Party, who is the claimant or the individual raising a claim for any kind of damage made by the policyholder. 

Whenever an accident takes place, it is the duty of the policyholder to inform the second party immediately and make them aware of the situation. It is equally significant to gather some necessary information related to the accident, such as:

1. The accident’s date, time, and accurate location. 
2. Details of the policyholder as well as the insurance that are present at the time of the accident. 
3. Proper data on the sustained injuries by passengers, drivers, and the damaged vehicle/properties. 
4. Information about the witnesses. 
5. Visibility and weather conditions during the accident. 
6. Evidence in terms of photographs, videos, or eye-witnesses present at the site.

If there’s a police inquiry associated, make sure to extract all the details of the insurance company and file an FIR (First Information Report). In addition, the claimant might raise a claim for repairs or injury compensation if the policyholder didn’t cause the accident. 

How To Opt For A Third Party Insurance Claim? 

In order to receive compensation from the insurance firm, the first party or policyholder should follow the claim rules. Here is a step-by-step guide to claiming third-party insurance:

• For starters, the insurance holder has to tip the insurance agency about the entire accident as soon as possible. Usually, the stipulated time is mentioned in the policy. 
• Secondly, the policyholder should file an FIR by reaching the nearest police station from the accident site. Do not forget to get a copy of it with you. 
• Further, file for insurance with the lender. They help you to fill out the form and adhere to the necessary document needs. 
• Complying with the claim file, a surveyor will be assigned by the insurer. The former assesses all the damages caused and verifies the estimated charges. After assessment, the surveyor files a properly structured report. 
• The report determines the third party insurance claim that is due. 

Additions And Exclusions Of The Insurance

There are some inclusions and exclusions related to this claim. As a policyholder, you should be well aware of it:

1. Additions

A third-party claim provides protection against injuries caused to the third party by the policyholder’s vehicle. Physical injuries, property damages, vehicle damages, and even death are covered under this. 

2. Exclusions

Under a third party claim compensation, the following things are not included:

• The accident is caused because of drunken driving.
• It was found that the driver was guilty of driving the car without having a valid driver’s license. 
• The accident was caused deliberately. 
• Commercial or illegal activities were carried out by this vehicle. 
• The automobile got stolen.

Read More: Indemnity: Definition, Types & Importance Of Indemnity in Business

Summing It Up

When it comes to a Third Party Insurance Claim, it is no less than liability insurance providing coverage against someone else’s damage. Property damages and auto-mobile damages are all classic examples of such insurance. 

With such insurance, you are protected against paying thousands of dollars. Exactly like other insurance forms, you will need it for day-to-day activities. 

So, that was all about a third-party insurance claim. Get yourself one if you want to be covered against unprecedented events. Happy insuring!

Read Also:

• What Is Reinsurance? : Types, Functions, How It Works, Advantages & More
• What Is Indemnity Insurance? How It Works And Who Needs It?
• What Is Double Indemnity In Insurance – Meaning & Needs