An insurance claim can involve more people than just the insurer and the insured. A third party is any person or entity other than the insurer and the policyholder who has an interest in a claim, most often a claimant seeking damages from the insured.

Liability insurance exists largely to respond to third-party claims. The insurer may defend the insured and pay settlements or judgments to the third party. First-party coverages, by contrast, pay the insured directly for their own losses.

Rights of third parties to recover directly from the insurer vary by jurisdiction and by the type of insurance. Additional-insured endorsements can bring certain third parties under the policy’s protection. Clear identification of who stands in which role prevents confusion when multiple entities appear in a loss.

• Person or entity other than insurer and policyholder
• Usually a claimant in a liability matter
• May have direct rights against the insurer in some cases
• Distinguished from first-party insureds