Car insurance is often confusing.  There are numerous legal terms spread throughout the explanations of what car insurance is and what types of insurance you can run into.  In a recent exploration to discover the types of insurance, the question of what 3rd party car insurance cover is came up.  In the United States we do not often think about having just third party insurance because our state laws require a certain amount of coverage on our vehicles.  However, there are instances in which you may find yourself looking for 3rd party insurance only.

The definition:
3rd party insurance only covers a third party involved in an accident. It does not cover any damages or losses to the first party.  In insurance you have the first party who is the insured.  For example if you own the vehicle that is damaged and have insurance under your name you are the first party.  The second party is the insurer or the insurance company.  The second party makes certain that you can file a claim and will be protected in a number of circumstances.  The third party can be the one claiming against you for damages, but they can also be the person at fault for the accident.  A third party is someone who is not on your insurance, but is involved with the incident.

Third party insurance is different from liability coverage.  Liability coverage is typically the least amount of insurance you can have on a vehicle.  It covers your vehicle from certain types of accidents, as well as the third party.  In other words you can have the insurance payout to fix damages to your car when it is involved in an accident.

With third party insurance you are not covered nor is your car.  Only the third parties vehicle or person is covered.  3rd party insurance covers you in the event of death or severe injury to another party.

When deciding on what type of insurance you want to have the first thing you need to know is the state requirements.  Your state may have a legal requirement stating full liability cover rather than 3rd party insurance.  However, if your state allows for third party insurance you may seek it.  More often than not 3rd party insurance has lower premiums than full liability cover.

There are two other incidences in which the driver may be offered only 3rd party insurance.  If a driver is too “high risk” for the insurance company, the company may offer only 3rd party insurance.  In this way the third party is covered which is a legal requirement, but the high risk driver is not.  It is designed to make the driver more cautious since repairs would come out of their pocket.

The other incident would be the age of the vehicle.  A vehicle that is 30 years old has a significantly lower value.  Damage that occurs to this vehicle would most likely be more than the value, thus it would be a total loss and cover is a moot point.