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third-party liability coverage

Third-party liability coverage refers to any type of insurance covering the legal liability of one party to another party.

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For example, commercial general, business auto, and errors and omissions (E&O) liability policies all provide third-party liability coverage. The majority of employemt 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.

Related Terms

First-party insurance is insurance that applies to the insured's own property or person.

A legal liability coverage form is the Insurance Services Office, Inc. (ISO), Commercial Property...