Claims & Disputes
Third-Party Claim
Third-party claims are made by injured parties or those who suffered a loss caused by the policyholder, seeking compensation from the at-fault party's liability insurer.
Last reviewed: May 2026 · Editorial methodology
Definition
A third-party claim is an insurance claim filed by a person or entity (the claimant) who is not the named insured or a party to the insurance contract, against the liability insurance policy of the party responsible for their loss. Common examples include: a driver injured in an accident filing a claim against the at-fault driver's auto liability insurer, or a customer injured on business premises filing against the business's general liability policy. In third-party claims, the insurer's primary contractual duty is to its policyholder—but the insurer must still handle the third party's claim in good faith and in compliance with unfair claims settlement practices laws. Third-party bad faith arises most commonly when an insurer fails to settle a liability claim within policy limits when it had a reasonable opportunity to do so, exposing its policyholder to excess judgment. The distinction between first-party and third-party claims is legally significant: subrogation rights, statutory deadlines, and the duty to defend all differ by claim type. Most states require insurers to acknowledge third-party claims within 10–15 days and conduct reasonable investigations.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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