Third Party Claim — Insurance Claims Definition
General
A claim by someone who is not the policyholder against the insured, typically covered by liability insurance.
Third party claims arise when an outsider alleges the insured caused bodily injury or property damage. The liability insurer owes defense and indemnity if coverage applies. The claimant is the third party; insured is first party; insurer is second party in some textbooks.
Settlement authority, consent clauses, and excess verdicts are key issues.
Examples
A customer slips in a store and sues the business; the GL carrier defends the store and pays a settlement within policy limits.
Common Mistakes
Insureds settle without insurer consent and lose coverage. Assuming defense means unlimited settlement authority — carriers control within policy terms.
