In commercial casualty insurance, what are "third-party claims"?

In commercial casualty insurance, third-party claims refer to claims made by individuals or entities that are not part of the insurance contract, specifically excluding both the insured and the insurer. This means that a third-party claim might arise from a situation where an external party suffers an injury or damage for which they seek compensation, typically from a business's liability coverage. For businesses, this often includes claims made by customers, clients, or members of the public who are harmed due to the business's operations or actions.

For instance, if a customer slips and falls in a store, they could file a third-party claim against the store's liability insurance for their medical expenses and other damages. This aspect of insurance is critical as it protects businesses from financial losses due to legal actions initiated by individuals who are not affiliated with the business in any formal capacity.

In contrast, claims made by the business against suppliers, claims for losses not directly related to business operations, and claims made exclusively by employees against their employer do not fit the definition of third-party claims as they either involve direct relationships within the business context or are related to employment rather than external parties. Understanding the nature of third-party claims is essential for effective risk management and liability protection in commercial operations.