What is Third Party Insurance? - What Are Its Important Features?
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Perhaps you are here in search of information regarding insurance policy and related categories. "Third Party Insurance" is a specific type of insurance among the many. Third party insurance is the type of insurance that is meant to cover the injuries caused by the insured person to some third person who have no connection with the insurance company.
Insured person is the first party to the contract. First party gets no direct benefit in third party insurance. Instead of benefiting the insured person directly, the liabilities of the insured person are paid indeed. Do you know that insured person and insurance company are the first and second party to the contract, respectively. Third party is the person or entity whose loss or injury is covered by the second party in favor of the first party.
It is important to mention that the injuries and losses to third party will be covered by the insurance company excluding those for which the first party is not legally liable. For example, if Mr. A is an insured person. During a drive on the road, he accidentally hits his car to a person Mr. C. Mr. C got some injuries to his car. Mr. C will claim for the loss caused by the hit of the car driven by Mr. A by providing proof. The insurance company will compensate the loss caused to Mr. C. The liability of Mr. A will be paid by the insurance company and that is the actual benefit to Mr. A.
If you have had a deal with some insurance company in the past then you will be aware of the fact that the amount of insurance premium depends upon the sum insured. But it is impossible to calculate the worth of the sum insured in case of third party insurance. Amount of premium is thus fixed and independent.
Now the question arises about the way, third party ask for compensation. This task is not possible without the help of a lawyer; he will not only be preparing all the documents but will also manage to collect the proof of the injury caused by the insured person. The process is a bit typical therefore not for all to do but lawyers.
Third party insurance is applied in case of vehicles only. The trend for third party insurance is much less than other types of insurance. In fact insurance corporations are not targeted to it. The reason is very simple. They do not know how much may be the compensation in future. This is basically something that has to happen in future.
