According to the Insurance Information Institute, when you find yourself in a motor vehicle accident there is a one in eight chance that the other driver will be uninsured. It is statistics such as this that prove how crucial it is to have third-party liability insurance as a way to safeguard you and your assets.
Not doing so has the potential to result in a hefty accumulation of fines, loss of your driver's license, and even incarceration. Having an in depth understanding of how third-party liability coverage works can provide you with a more solidified impression of why it is so essential.
When a consumer is on the market looking for a liability policy, they are considered the first party in this particular coverage lineup. Once they choose an insurance company to contract with, the insurance company then becomes the second party in the scenario.
If an auto accident were to occur after the coverage start date, then the other driver is considered the third party. The third party can also include owners of property that incurred damaged as a result of the accident.
Third-party liability policies work by protecting you against any claims that could be pursued by these third parties such as injury, destruction of personal property, or even death. These losses are grouped into two different types of coverage: bodily injury liability and property damage liability.
If you find yourself in a situation where you are liable for either of these forms of damages, the insurance company will allow you to file a claim in order to compensate any losses that the third party is facing. Your insurance company will determine the appropriate compensation through appraisal methods and/or reviewing hospital bills related to the incident.
Depending on your policy's coverage limits, the determined amount will then be dispersed to the third party to cover said losses. Any amount that is over the active policy's limit will be at the responsibility of the first party, which is you. This is why having adequate coverage in liability policies is paramount.
If you find yourself facing legal action due to inadequate coverage in a third-party liability case, The Daspit Law Firm knows how to help. We have years of experience in personal injury law, and can assist you in facing or filing any related claims. Call us today for a free consultation.
All too often, accident victims are steamrolled by insurance companies determined to minimize or deny their claims. Don't let this happen to you. Hire us to fight for the compensation you deserve.