Third Party
In general insurance, which includes car insurance, the first party to an insurance contract is the insured – the person who applied for insurance and is now the policyholder. The second party involved is the insurer, the person or institution providing the insurance, most commonly known as the insurance company.
Anyone else, who has a supposed (or alleged) or an actual right of action against the insured person, represents a third party. Third party basically means “someone else.” This right of action can be for injury, death or damage to property belonging to the third party. The third party can be another motorist, a passenger in the third party’s car or in the car of the driver who caused the accident, or a pedestrian. It could also be the owner of other property that was damaged by the insured person’s car, such as a house or parked car.
In South Africa claims from third parties for injuries or death is handled by the Road Accident Fund (see this section for further details) but the property of the third party is not covered under the fund and therefore third party cover becomes a necessity in car insurance.
An insurance company can claim from a third party in the case of subrogation (see subrogation for more details.)