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Third Party Auto Insurance

In virtually every state across the country, drivers are legally required to carry auto insurance protection in order to legally be allowed to drive. Although different states have different specific laws regarding rules and regulations surrounding auto insurance, each state requires some form of third party insurance. Third party insurance is a confusing term even to people who are somewhat familiar to auto insurance jargon. But it is required all across the country, so knowing what this term means and what third party insurance includes can help you to ensure your policy is up to date and legally sound.

Third Party Basics

The reason there is so much general confusion or simple lack of knowledge about third party auto insurance is that it also goes by another, more well-known name. Third party insurance is also known as liability insurance. The reason it is called third party insurance is that it is designed to pay out to third parties involved in a liability accident-other drivers and passengers, pedestrians, property owners and even cities or companies. Third party auto insurance covers any damage a driver might cause in an accident, whether it is property damage or bodily injury leading to the need for medical care.

Third party or liability auto insurance has three basic parts. In some cases, these parts are separate, each of them having its own limit of coverage and its own assigned deductible. In other cases, these three parts are combined, drawn from one source of coverage with a single deductible. In either case, the basic modes of protection are the same. The three parts of a third party auto policy are single victim bodily injury liability, single accident bodily injury liability, and property damage liability.

Single victim bodily injury liability is the portion of the policy set aside to deal with the financial cost of taking care of injuries sustained to the other driver or a single victim of a liability accident. In this case, the third party would be a single person, though not necessarily a driver. It could also be a pedestrian, someone on a bicycle, or someone indoors in a building struck by a vehicle. Split limit liability or third party policies set aside a specific portion of the overall limit of protection for specifically dealing with this sort of expense. Single limit policies make no such distinctions.

Single accident bodily injury liability protection is the limit of a policy set aside for responding to any and all injuries suffered by other victims of an at fault accident. This part of a split limit policy only gets accessed if more than one victim gets injured and requires medical care for their injuries. In a single limit situation, all the money would be available to deal with either one injury or several. Single limit, thus, tends to allow the policy holder to access more of the overall funds available, though this type of third party or liability insurance costs more than split limit.

Mandatory Protection for Third Parties

Third party auto insurance is mandatory for all drivers in virtually all parts of the country. Each state does have its own rules and regulations governing exactly how a third party policy is built and administered. The specific monetary minimums of coverage differ by state, according to each state's auto insurance law. Third party auto insurance is the only type of auto insurance every driver has to carry, so it is the universal insurance all insured drivers have in common. As such, third party insurance is the cornerstone or the foundation of your auto insurance plan. Every other optional element is added in above and beyond this foundation you have to have in order to drive.

In most states, you must present a proof of third party or liability auto insurance at the secretary of state's office in order to get your vehicle registered and to get your plates. In some cases, your driver's license is tied to your insurance status. This is a recent trend seen over the past few years as states have stepped up the fight against uninsured motorists on the road.

Uninsured motorists cost both states and other insured drivers millions of dollars every year. That's why it is so critical to carry and keep up with your third party liability insurance policy. By making sure to keep your insurance current and avoid lapses in coverage, you not only avoid possible punitive consequences like higher auto insurance rates from providers and possible license or registration suspensions from the state, but you also help keep down the cost of auto insurance for everyone around you. The more drivers carry auto insurance, the less of a burden the uninsured will be on the rest of the driving population.

Make Sure You Are Covered

Again, that is why it is so important to make sure you are covered. But the law is not the only reason to keep up with your third party auto insurance obligations. You should also do so because of purely financial reasons. As mentioned previously, avoiding an insurance lapse saves you a great deal of money in the long run. It saves you from paying fines to your government, and it keeps your rates lower. But it can also save you money in a much more dramatic way.

Legal obligations aside, the reason we carry third party auto insurance at all is to prepare us to pay that third party in the event of an accident. If you get into a serious accident and you are found liable, you need a solid liability policy to bail you out of the financial responsibility that comes with such an assignment of fault or negligence. As compared to collision and comprehensive insurance, third party insurance is actually the cheapest major portion of the typical auto policy. This may not be true in every case, depending on the specifics of the circumstances and the limits of coverage elected for the different parts of the policy. But generally third party insurance is the cheapest part of your policy.

In contrast, the cost of dealing directly with your financial responsibility in the wake of a liability accident with no appreciable auto insurance could be catastrophic. You may run into a situation where you are facing costs far beyond that which you could ever pay. But that would not stop the other driver's attorney from coming after you for the money-even if it means going after your personal assets. In short, it just does not make much sense to go without third party auto insurance when the cost is so low relative to the possible liability situation it can save you from if you should ever get involved in an at fault accident during the covered policy period.

Third party auto insurance is a type of coverage many of us may not be familiar with, even though all insured drivers have it. It is just another term for liability insurance, which is the starting point of any effective policy designed to protect you and provide value for your premium dollar. Make sure you carry adequate third party auto insurance, enough to protect you following an accident.

 

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