Glossary

Thermal pollution is caused by the discharge of heated water from industrial processes into a waterway or body of water in quantities that can harm plant or animal life in the water. One of the forms of pollution specifically addressed in the commercial general liability (CGL) policy definition of "pollutant."

Third-party-over action is an action in which an injured employee, after collecting workers compensation benefits from the employer, sues a third party for contributing to the employee's injury. Then, because of some type of contractual relationship between the third party and the employer, the liability is passed back to the employer by prior agreement. Additionally, there are instances in which the third party can circumvent the exclusive remedy doctrine of workers compensation and enjoin the employer in the action. Depending on the nature and allegations of the action, coverage may be afforded under the contractual liability section of the employer's commercial liability policy or the employers liability section of the employer's workers compensation policy.

The third-party administrator handles various types of administrative responsibilities, on a fee-for-services basis, for organizations involved in cash flow programs. These responsibilities typically include claims administration, loss control, risk management information systems, and risk management consulting.

The third-party beneficiary principal is a legal concept that allows a third party to sue to enforce a contract to which it is not a party if the contracting parties intended to benefit the third party at the time the contract was executed. Third parties can file actions to enforce a contract only when they can demonstrate that the contracting parties intended to confer upon them a direct benefit. If the intent is lacking, the court will likely rule that the plaintiff is merely an "incidental beneficiary" with no legal cause of action on the contract. Examples of where an intended benefit has been found by a court include condominium purchasers who relied on the architectural design provided by an architect to the developer, a project owner who relied on information provided by a project architect's consultant, and homeowners who sued for the completion of roads as stipulated in a contract between the developer and the city.

Third-party claims are liability claims brought by persons allegedly injured or harmed by the insured. The insured is the first party, the insurer is the second party, and the claimant is the third party.

Third-party employment practices liability coverage refers to a separate insuring agreement contained within employment practices liability insurance (EPLI) policies that covers liability claims brought by nonemployees (typically, customers, clients, and vendors) against employees of the insured organization. Third-party employment practices liability coverage is needed because coverage for claims by nonemployees is not provided under commercial general liability (CGL) policies. This is because CGL policies exclude coverage for harassment and discrimination—the two causes of action most likely to be alleged in claims by third parties. Third-party employment practices liability coverage is most often provided under Insuring Agreement B within EPLI policy forms and is subject to a limit that is separate from the limit applicable to Insuring Agreement A (which covers "traditional" employment practices liability claims brought by employees against the insured company and/or other employees). On the other hand, a substantial minority of insurers offers third-party employment practices liability coverage by means of a separate endorsement, whose limit is included within Insuring Agreement A of the policy. A firm's exposure to third-party liability claims is driven largely by the extent to which its operations involve contact with the public. For example, an airline, which engages in frequent, intensive customer contact, has a much greater exposure to third-party claims compared to a firm that manufactures aircraft engines for sale to a handful of large industrial customers. Such differences are reflected in the rates insurers charge for third-party employment practices liability coverage.

Third-party liability coverage refers to any type of insurance covering the legal liability of one party to another party. For example, commercial general, business auto, and errors and omissions (E&O) liability policies all provide third-party liability coverage. The majority of employment practices liability (EPL) policies do not explicitly cover third-party claims, although most insurers will provide such coverage by endorsement. In the context of EPL insurance, a so-called third-party liability coverage option is sometimes available to address claims made by nonemployees (e.g., customers, vendors, clients) against the insured company that arise from acts committed by employees. Most often, third-party claims allege some form of either discrimination or harassment.

A third-party litigation financing (TPLF) arrangement is a financial arrangement in which an outside party—unrelated to the lawsuit—provides funding to a plaintiff or law firm (typically on a nonrecourse basis) to cover litigation-related costs in exchange for receiving a future portion of any financial recovery from that case or group of cases.

Third-party litigation funding is a type of financing for litigation—a nonrecourse loan that limits the lender's recovery to the collateral alone. In exchange for an agreed share of the proceeds of a successful claim, a third-party litigation funder will normally fund some or all of the legal costs and disbursements to take the claim to trial. If the claim is not successful, the funder loses its investment.

A third-party payer is the insurer or other health benefit plan sponsor that pays for medical services provided to a patient. In this scenario, the insurer or organization is the third party that pays for the service. The patient is the first party and the healthcare provider is the second party.