Insurance Policy Basics: Third Parties

Insurance Policy Basics: Third Parties

Who is a third party?

A third party is simply a natural person or legal entity that is separate from the first two parties, typically, to a contract at law.

Example of a third party: 

If for example, Mr Joe Bloggs, as the registered owner of a motor vehicle takes out a private motor policy with ABC Insurance Limited, then the first two parties to that contract are Mr Joe Bloggs and ABC Insurance Limited.

A third party to that contract could be a financier who is providing funds for the purchase of the vehicle. The financier would typically want to be noted on the policy as an “interested” third party in order to ensure that the vehicle is insured and that their financial interest in the vehicle is protected accordingly.

Another example of a third party is another motorist with whom Mr Bloggs is involved in an accident. No matter who is at fault, the third party (by virtue of his/her involvement in the damage of an insured vehicle) is now a third party member to the Insurance contract.

Other types of third parties can include, but are not limited to:

  • The mortgagee to a home (usually noted on a Home & Contents policy),
  • A government department that awards a tender for some form of public works (which usually require that they be noted as an interested third party with respect to Public Liability Insurance),
  • A landlord who, in letting a property to a tenant, requires as part of the lease that the tenant meet all Insurance requirements for the property. The landlord may wish to be noted on the relevant Insurance policy (say for the building Insurance) as an interested third party.

It is also common for the notation of an interested third party, typically on the Insurance Policy Schedule, to specifically note the nature of the interest involved. i.e. mortgagee, hire purchase, landlord etc

For more information on Third Parties or any Insurance policy questions please contact Nepean Brokers at 03 5982 2330.

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