Third Party Liability Insurance

How Third Party Liability Insurance Works

Insurance is essential to us in everyday life. It is the safeguard that allows us to carry out so many necessary activities without the fear that we will lose everything in case an accident should occur. It is necessary for both individuals and businesses, for our homes, cars, and many other areas of our lives. Most of these types of insurance are meant to protect us in case there is an accident, but there is another type of insurance that is meant to protect us from others.

In third party liability insurance, a policy is taken out by someone who wants to protect their self from claims made against them. The idea is for the insurance to pay out rewards from judgments made against the insured, so the insured doesn’t have to pay them on his own.

Here is an example. In auto insurance, third party liability insurance would come into play if you are in an accident and are the one at fault. Your auto insurance may pay for damage to your own car or personal injury, but only a third party liability insurance will pay for the third party, or the person you hit.

When an accident happens it can cause a lot of emotional, physical and financial stress for the person who is injured. It is no wonder people go looking for the person who is at fault. They cannot afford to pay those medical bills or take so much time off work. The fact of the matter is, though, you can’t afford to pay for that either. This is where your insurance comes in handy. Very handy.

With most third party liability claims, your insurance will pay for the rewards granted to the injured, up to your set limit, but also will usually pay for legal fees. This is very helpful, as you will often have more to pay for the legal fees than you have to pay the person who sues.

Of course your liability insurance, whether it is a general business liability or auto liability or any other, will only cover you to the limit set in the policy you have chosen. Unfortunately that is often not enough to cover all the costs. Sometimes you may find the reward going near or above a million dollars. That’s enough to break most any bank. A personal liability or personal umbrella liability insurance will cover you on top of your other insurance limits for a higher set amount. This means that if the limit in your auto insurance is $500,000 and you need to pay $1,000,000, your personal policy will cover the second half of that.

Third party liability insurance is much like other types of insurance, but instead of protecting you by giving you the money for your damage, loss or injury, it pays to the person who is filing a claim against you!

 

 

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