Third Party Liability Car Insurance in USA

Meaning of Third Party Liability Car Insurance

The third party liability car insurance in USA is a category of liability insurance policy that provides financial coverage to a car owner in the event of damages to properties or injury to bodies of third parties as a result of accident.

In car insurance, the policyholder is the “first party”, the insurance company is the “second party” while the others which the insurance policy is made to protect is the “third party”.

The third party liability car insurance policy represents the commonest type of liability insurance. As a matter of fact, the policy is compulsory in USA and almost all countries of the world. It is the least form of car insurance the law requires owners of cars to take.

In The United States of America

The third party liability car insurance in USA is mandatory in most states. However, the different states have a peculiar way of enforcing the requirements for liability insurance. For instance, the policy is not mandatory in the state of Virginia but the residents must pay into the state, a $500 annual fee per car if they elect not to buy liability car insurance. And just as the modus of enforcement varies, so do the penalties for not purchasing the policy vary state by state. However, the penalties usually payment of fines, withdrawal or suspension of license and sometimes, terms of imprisonment.

Similarly, the States of California and New Jersey have enacted the “Personal Responsibility Acts” in order to put further pressure on all car owners and drivers to buy third party liability car insurance by preventing uninsured drivers from claiming non economic damages like compensation for pain and suffering in the event they sustain injury in any way while driving.

Furthermore, in the state of North Carolina, a non holder of third party liability car insurance will not be able to access a license. The state does allow the issuance of fleet license if the license holder has no insurance.  Thus, the license holder must produce a state form DL-123 as proof that he has insurance with a requirement of a signature of an insurance agent. This is in addition to $10 fee, to convert the fleet license into a full license.

In all, it is advisable to always check or research the requirements with respect to third party liability car insurance in the state where you work or reside in the USA.

Types of Third Party Liability Car Insurance in USA

There are two major type of third party liability car insurance policy and these are;

  1. Bodily injury liability.
  2. Property damage liability
Bodily Injury Liability

This is the type of car insurance policy in USA that arises as a result of bodily injury. The level of coverage could include the cost of treatment, cost of prescription drugs, lost wages and other sort of loss or damage in connection with the accident.

Property Damage Liability

This class of liability car insurance offers coverage for costs resulting from damages to properties of third parties. It also covers loss as a result of damage to the property of third parties.

Benefits of Third Party Liability Car Insurance

There are a lot of benefits for buying the third party liability car insurance and some of them includes;

 Legal requirement

In the state of America and indeed other jurisdictions, buying the third party liability car insurance policy is a compulsory requirement of law. In these states in USA, it is compulsory that you must have third party car liability insurance before you drive your car.

Passenger satisfaction

Some cars are usually used for commercial purposes. Thus, the presence of this type of policy will provide satisfaction and peace of mind to the passengers and customers.

Protection against legal liability

It affords protection to the policyholder against legal liability as a result of law suits.

Peace of mind.

Buying a third party liability car insurance in USA provides the policyholder with peace of mind. This level of peace of mind comes from the certainty that you have insurance coverage in the event of injury or damage to third parties.

Financial Stability

Third party liability car insurance policies guarantee financial stability for a policyholder. The monies that could have been expended by a policyholder due to loss are taken care of by the insurer.


The Third-party insurance policy in USA is cheaper when compared to other category of car insurance policy such as the comprehensive car insurance policy. It also requires less documentation and paperwork since it is for a third party.


  1. The policy does not offer insurance protection to the policyholder but rather third-parties person or their properties only.
  1. This policy offers a very limited insurance coverage

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