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What is a third-party claim?

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A

When you’re involved in a car accident that wasn’t your fault, you can file a third-party claim with the other driver’s insurance company. Their liability insurance can cover the damage or injury they caused you.

Stephanie Nieves author photo

Stephanie Nieves

Published July 15, 2020

KEY TAKEAWAYS

  • A third-party claim holds the at-fault driver accountable for damage to your vehicle using their car insurance

  • Depending on where you live, the at-fault driver’s car insurance may also cover medical expenses after a car accident

  • You can file a third-party claim directly with the at-fault driver's insurance company, or your insurance company can work with theirs to determine how much their liability coverage will pay out to you

In almost every state, drivers are required to carry a minimum amount of liability insurance to cover injury or damage they cause to another person or vehicle in an accident. But how does liability coverage work in practice? Well if you’re in an accident caused by another driver, you can file what’s called a third-party claim with the at-fault driver's insurance and their liability coverage will pay out to you.

A third party claim is the method through which you can get the at-fault driver's liability insurance to pay out to you. If you're involved in an accident and the other driver is clearly at fault, you would file a third-party claim with their insurance company and their liability coverage will cover any damage they caused, and may also cover medical expenses, depending on your state.

There are a few steps you must take when filing a third-party claim, many of which are similar to filing a first-person claim with your own insurance. If accepted, you may either receive compensation for damage to your car or coverage for both property damage and bodily injury, depending on whether you or not you live in a no-fault state.

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What is a third-party insurance claim?

When you’re involved in an accident that wasn’t your fault, a third-party claim can cover your car repairs, medical expenses, or temporary transportation using the at-fault driver’s car insurance. Also referred to as a liability claim, a third-party claim holds the at-fault driver responsible for paying for any damage they’ve caused you.

A third-party clam is essentially using the other driver’s liability insurance to cover the damage or injury they caused you. You can file a third-party claim directly with the other driver’s insurance company, even though you’re not a policyholder. In some states, the other driver’s insurance will cover both property damage and medical expenses, but in other states, the other driver’s insurance will only cover your property damage and you will have to file a claim with your own insurance company to cover your injuries and any injury-related expenses. The other driver’s insurance can also cover a temporary rental car while yours is in the shop following the accident.

If the at-fault driver doesn’t have sufficient coverage or isn’t insured at all, your insurance company can still cover for your injuries and damage if you have uninsured/underinsured motorist insurance and collision coverage as part of your policy.

Conversely, if you’re the driver at fault, the other party can file a third-claim through your car insurance and receive a payout up to your coverage limits if their claim is accepted. If the claim exceeds your liability coverage limits, you may need to pay the rest out of pocket.

Third-party claim vs. first-party claim

Insurance is usually about two parties: the policyholder (first party) and the insurance company (second party). But when the policyholder is liable for damage to another driver’s property, that other driver can file a claim through the policyholder’s insurance, hence the third party.

In a first-party claim, you’re using your own car insurance to cover the costs. A third-party claim uses the other driver’s liability insurance to help you pay for car repairs and medical expenses.

In the event of an accident caused by another driver, you may still need to file a first-party claim through your insurance company. But a third-party claim allows you to make a claim against the at-fault driver’s car insurance to pay for your expenses, up to their limits.

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What information is required to file a third-party claim?

At the scene of an accident, the first things you should do are get everyone to safety and call 911. If it’s clear that you are not at fault for the accident and you’ll need to recoup the costs of any damage from the other driver’s insurance, you can use the following steps to guide you through filing a third-party claim and help you gather all the necessary documents:

1. Gather information at the scene

As you wait for police and first responders to arrive, gather all the information you’ll need to help you file a claim. The officer assigned to your call will likely ask you for the following information, which will also be used when you report a claim:

  • Policy numbers and information, names, and phone numbers of everyone involved
  • Photos of the damage and the scene of the accident
  • License plate numbers and the make and model of each car involved
  • Names of witnesses and the responding police officer
  • Details of the incident including the order of events, location, and weather

You should also ask the responding police officer for a copy of the police report — you’ll likely need it to file a claim. You may have to request it from the responding officer’s police department after the fact.

2. Contact your own auto insurer

Immediately following the accident, you should contact your own insurance company, even if you were not at-fault. Depending on which state you live in and the extent of the damage, you may still need to use your own insurance to cover some of the costs resulting from the accident.

If the other driver is at fault, you can file a third-party claim against them with their insurance company and their liability coverage will pay out for the damage they caused. Your insurance company can work with the other party's insurance, or they may tell you to file a third-party claim directly with the other party's insurance.

If you have filed a claim with your insurance company, you can go through the claims portal as usual, and they'll determine fault and negotiate the payout from the other party's liability insurance. If you file a third-party claim directly with the other party's insurance, you can track your claim with them even though you're not a policyholder.

3. Work with a claims adjuster

During the claims process, you may be assigned a claims representative or adjuster who will determine full- or partial-fault after investigating the accident. If you’ve filed a claim with your own insurance company and the other driver is found to be at fault for the accident, the claims adjuster will work with that driver’s insurance company to help you get compensated for the damage you’ve sustained.

If you’ve filed a claim against the at-fault driver with their insurance company, you’ll work with an adjuster or representative from their insurer. At the end of the process, you’ll receive a payout, or settlement offer, from the at-fault driver’s insurance company.

Third-party insurance claims in different states

Each state has its own laws around car insurance, and at-fault states have different rules than no-fault states. You can file a third-party insurance claim in any state and can receive compensation for both bodily injury and property damage in an at-fault state, but in a no-fault state, only property damage is covered by the at-fault party’s insurance.

No-fault states

In the 12 no-fault insurance states and in Puerto Rico, drivers involved in an accident must file a claim for bodily injury with their own insurance company, and their personal injury protection, often called PIP, can cover medical expenses or related costs. This means that no matter who is at-fault, every driver needs to cover their own medical expenses and lost wages. You can still file a third-party claim with the at-fault driver’s insurance, but their liability coverage will only cover damage to your car.

At-fault states

In at-fault states, the driver who caused the accident is responsible for covering the costs of both bodily injury and property damage to the other drivers involved. In these states, you can typically file a third-party claim with the at-fault party’s insurance to help you pay for car repairs and medical expenses.

About the author

Insurance Expert

Stephanie Nieves

Insurance Expert

Stephanie Nieves is an Insurance Editor at Policygenius in New York City. She has a B.A. in writing and rhetoric and previously worked as an SEO & Editorial Associate. Her words can also be found on PayScale, Fairygodboss, and The Muse.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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