One of most common types in automobile insurance is third-party automobile insurance. Third-party insurance is a policy that protects the policyholder against actions (damages claim) of another party, typically by a-not-insured driver. The driver who cause the damages is the third party. To be specific, the first party is insured, the second party is the insurer and the third party is someone who will probably claim. The first party is responsible for its own damages or losses, no matter how they were caused. Third party insurance is a form of liability insurance. There are two kinds of third-party liability coverage: bodily injury liability and property damage liability. Bodily injury liability covers cost related to people, including medical expenses, lost income and others. Property damage liability covers expenses in regard to property or tangible objects.

Most states, exception of a few states, require anyone who drives have to carry at least minimal amount of liability coverage, both of those types. Every states have their own minimum requirement for each type. Liability coverage is essential, even in no-fault states. The purpose of no-fault laws is to clear courtrooms filled with ordinary injury lawsuit attached by low-dollar price as well as all claims fro pain and suffering. No-fault laws do not protect the insured from million dollar injury lawsuit from seriously injured third party. If someone has substantial assets to protect, the more important third-party insurance for them. If they have more money and assets, they will have higher limit for each type of liability coverage.

There are another types of third party liability insurance, for instance public liability insurance and product liability insurance. Public liability insurance covers industries or businesses that their activities involved or will affected third parties, like subcontractors, visitors or common public. They take this kind of insurance to protect them from property damage or personal injury. Meanwhile, product liability insurance covers all major product classes and types, including chemicals, agricultural products and recreational equipment. This insurance will protects companies from lawsuits over product that cause damage or injury. Product liability insurance usually mandated by legislation.