Definition

• A third party in an auto insurance claim is someone other than the person who holds the insurance policy. The passenger who is injured in an accident while riding in her friend's car, the pedestrian hit by a car while crossing the street and the property owner whose building is damaged by a passing car are all considered third parties if they file an auto insurance claim for compensation.
  
  

Significance

• Many insurance holders have coverage for a third party claim. This means that the insurance companies are obligated to offer compensation to the wronged or injured claimant.
  
  

Warning

• According to the law firm of Gillian Jacobson Ellis & Larson, insurance companies do not always honor third party claims because they assume that most people do not know about their rights with regard to this type of coverage.