Who is the third party in an insurance policy?

In the context of an insurance policy, the third party refers to an individual or entity that is not directly involved in the contract between the policyholder and the insurance company but is affected by the actions or negligence of the policyholder. When the owner of the policy, known as the first party, causes harm or damage to another individual or their property, that individual becomes the third party.

In liability insurance, for example, if a policyholder causes an accident that results in property damage to another person, that individual is the third party who is entitled to make a claim against the policyholder’s insurance. The insurance company, in turn, steps in to cover the claim on behalf of the policyholder, illustrating the role of the third party in the insurance process.

The other options pertain to different roles within the insurance framework: the owner of the policy is the first party, the insurance company is the second party, and the agency representing the insurer typically acts as an intermediary, but none of these roles describe a third party in the context of the liability or harm involved in an insurance claim.