Which type of claims does the term "third party" refer to in insurance?

The term "third party" in insurance specifically refers to claims made on behalf of someone else, particularly in the context of liability insurance. In this scenario, a third party is an individual or entity that is not directly involved in the insurance contract but has suffered a loss or injury due to the actions of the insured. For instance, if an insured driver causes an accident and injures another person, that injured party, who is not the insurer or the insured, would be considered a third party. The claims that arise from such incidents generally seek compensation for damages or losses incurred by that third party due to the insured's actions.

This concept is fundamental in understanding liability coverage, as it emphasizes the protection provided by the insurer not just to the insured individual but also to others who may be affected by the insured's actions. In contrast, claims made by the insured pertain to first-party claims, whereas claims involving government entities or between two insured parties do not fit the typical definition of third-party claims.