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Third Party Liability Coverage

Third-Party Liability Coverage

Definition

In general, 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. In the context of employment practices liability (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. The majority of EPL policies do not explicitly cover third-party claims, although most insurers will provide such coverage by endorsement.

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