Third Party Liability Insurance for Business, Travel & Rental Car in United States & Nigeria

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As a consultant firm, we often get asked about third party liability insurance. It’s a term that can be somewhat confusing to many people and one that has certain misconceptions surrounding it.

Favourable, it’s not nearly as difficult to understand as you might think. Here’s a basic rundown of what you need to know about third party liability insurance.


Due to the increasing number of humans in the world, the changing climate and technology shift of these days, a life-changing incident can happen in the blink of an eye – whether it’s a car crash, an injury in your home or an accident at your place of business. But did you know that you could be held financially accountable for an incident, even if it’s not your fault? That’s where third party liability insurance comes in.

In one word, third party liability insurance protects you against your actions and, in some circumstances, the actions of others. For example, if you cause an accident while driving, or a friend is driving your vehicle and causes an accident, third party liability insurance would cover the cost of injury/damages to the other driver and/or their vehicle. Here’s how it’s broken down:

  • First party = you
  • Second party = your insurance company
  • Third party = other parties involved in the incident

It’s important to note that third party liability insurance only covers the legal, medical or associated costs for others who are involved in the incident, not yourself. If you’ve been found to be directly at fault in a particular incident, you and your property would only be protected if you have first party coverage.


This unique form of insurance is available for both individuals and businesses. It can protect your car, your home and your company in the event of any medical, legal or associated costs related to an incident caused by you or, in some circumstances, someone else (such as an employee, family member or friend).

Businesses Coverage:

Many businesses carry third party liability insurance to cover a wide range of specific risks, including legal fees associated with employee claims, costs associated with injuries sustained by customers, and any claims made against your business’ products or services.

Automobile Coverage: Rental Car, Airplane Travel, Train

Let’s say you lend your car to your neighbor Jim who gets into an accident and badly injures Sally, an innocent bystander. Since it was your vehicle, Sally could potentially sue you and Jim. Third party liability insurance would cover any of medical and related expenses incurred by Sally that you would be held liable for.

Home Coverage:

A similar situation might arise in your home. Say you’re having a party in your backyard. Jim accidentally injures a guest while on your property. Both you and Jim would again be protected by third party liability insurance (each under your own homeowners policy) that would cover the injured guest’s legal, medical and associated costs resulting from the accident.
So there you have it – a basic rundown of how third party liability insurance works and how it can protect you when the unexpected happens.
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