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Introduction and Important Aspects - Third Party Insurance

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Perhaps you are here in search of information regarding insurance policy and related categories. There are too many categories of insurance plans; one among them is "third party insurance". When it comes to indemnify the losses incurred to a third party, third party insurance comes as a solution; this small piece of writing is aimed to deliver you some basic know-how in this regard.

Insured person is the first party to the contract. First party gets no direct benefit in third party insurance. It covers the loss to the third party caused by the insured person. In other words it can be said that it covers the liabilities of the person who insured himself with the insurance company. In order to avoid any confusion, it is better to state that insured person is always the first party and the insurance company is always the second party to the insurance contract. 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. Take a simple example, let say Mr. J is insured and while driving on the road, he accidentally strike his car to a person Mr. L. The wind screen of the car of Mr. L breaks down. In this case, Mr. L will get the benefit from the insurance company on the behalf of Mr. J. The situation is quite simple, the loss is caused by Mr. J and therefore Mr. J is liable to compensate Mr. L. Insurance company will make it on behalf of Mr. J.

In most types of insurance plans, a particular asset is being evaluated in terms of money and then premium is calculated based on this evaluation. In third party insurance, the liabilities are not known before they occurred therefore the premium is not based on the worth of the asset or liability. Insured person, in this case, has to pay a fixed amount as premium.
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. For a common man it is not possible to make all these things ready as per legal requirements.

Third party insurance is applied in case of vehicles only. You will be amazed to know that third party insurance is not so common. 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. No one can tell what is going to be occurred in the coming times.