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Third-party car insurance is required in most states and protects you if you’re at fault in an accident and need to pay for damage caused to another driver. This type of coverage is also called liability insurance.
You’ll need third-party car insurance to cover claims other drivers make against you for damage you caused. These third-party claims comprise three different groups of people. You’re the first party, and your insurer is the second. Everyone else on the road is the third party who receives coverage when you cause the damage.
The different types of third-party coverage include renters insurance, homeowners insurance and business owners policies. For auto insurance, there are two types of third-party coverage: bodily injury liability and property damage liability. These are basic forms of liability coverage.
Third-party auto insurance usually doesn’t come with a deductible. For example, if you hit another car and your insurance covers the cost of the other driver’s repairs, you won’t have to pay anything out of pocket.
When you’re buying third-party auto insurance, you’ll need to choose the amount of coverage you want. Your policy will either be split limit or combined single limit.
While shopping for liability coverage, you may see an insurance policy expressed as “25/50/15.” When you see numbers like these, you’re looking at a split limit policy.
These numbers are just shorthand for how much your insurance will cover you for.
The three numbers will change to create different policies. Your state will most likely have policy minimums, but otherwise you’re free to choose the right mix for your own needs.
A combined single limit policy offers one coverage limit.
Let’s say you took out $200,000 of combined single limit coverage. In the event of an accident, you can split this coverage between different types of damages. For example, you’d be covered in these instances:
All of those costs are $200,000 or less, so your insurance will cover them.
In every state except New Hampshire and Virginia, you’re required to buy third-party coverage. Furthermore, your state requires certain minimums in bodily injury liability and property damage liability. Third-party coverage ensures you’ll have the means to pay if your vehicle causes damage to others or their property.
View liability coverage requirements by state
If you live in New Hampshire, you’re not required to have auto insurance. However, you need to prove you can pay if you cause bodily injury or property damage. The easiest way to do this, of course, is by purchasing insurance.
It’s not mandatory to have auto insurance in Virginia, either. But like in New Hampshire, you must prove that you can pay for costs stemming from bodily injury or property damage. You can do that by either buying insurance or paying a fee to Virginia’s DMV.
Typical costs for liability-only or state minimum policies are in the range of $500 to $1,000. The cost of third party auto insurance will vary considerably depending on your age, where you live and your driving history, among other factors.
| Company | Average annual rate | Learn more |
|---|---|---|
| Geico | $394 | |
| USAA | $416 | |
| Progressive | $536 | |
| Grange | $557 | |
| Mercury | $564 | |
| Kemper | $615 | |
| 21st Century | $651 | |
| Allied | $666 | |
| Nationwide | $666 | |
| Allstate | $693 | |
| Liberty Mutual | $709 | |
| State Farm | $726 | |
| The Hartford | $727 | |
| Average | $598 | Compare all reviews |
Before you hit the road, you’ll need car insurance. Third party liability coverage will protect you against other drivers’ claims for bodily injury and property damage.
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