Third party insurance is a type of insurance that the policy owner takes out to cover costs of injuries to a third party. It's also another term for liability insurance. Sounds circular, I know, but let me give an example.
For example, when you buy auto insurance you are required in most states by law to carry liability insurance. This way if you hit a pedestrian with your car (God forbid) the insurance will cover the medical costs associated with the accident (and of course pass the costs on to you later in the form of increased premiums). This saves the average motorist who gets in a wreck the out of pocket cost of paying the injured person's repair bills, hospital bills, and so on.
Thank the heavens for liability insurance! If an uninsured person gets into an accident, they could end up owing a lot more than their car or even their house is worth and having no one to help them out!
Of course, liability insurance (or 3rd party insurance) also applies in other situations. Businesses need it to protect themselves from lawsuits of customers who slip and fall on their premises or eat underprepared food they produce or grow. Some businesses such as skydiving operations or mountain climbing groups may require their customers to sign a waiver of indemnification before they can participate in their business. This waiver constitutes a relinquishment of certain rights, most importantly the right to sue the business should something go wrong.
I hope this answers your question.
2006-10-31 14:43:34
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answer #1
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answered by poetjones29 1
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third-party insurance
Definition of third-party insurance ... third'-par'ty insur"ance. Pronunciation: (thûrd'pär'tÄ), [key] insurance that compensates for a loss to a party other ...www.infoplease.com/dictionary/third-party+insurance -
2006-10-31 22:29:21
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answer #2
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answered by Anonymous
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