phrase
third party
In plain English
A claimant outside the insurer-insured relationship — someone who claims against you under your liability coverage.
The insurer is one party, you're the second, and the claimant is the third. Liability coverage is sometimes called 'third-party coverage' because it pays others, not you.
What it covers
Liability coverage responds to third-party claims by defending the insured and paying damages within the policy limits.
What it does not cover
Third-party claims do NOT reduce or interact with first-party coverage. They're parallel coverages on the same policy in many cases (e.g., homeowners).
Where it trips people up
Some claims are mixed (a partner who's both a co-owner and an injured party in a workplace accident). Coverage analysis can get complicated when first/third party lines blur.
The technical version
A claimant other than the insurer or the insured, typically asserting a claim under the insured's liability coverage.