What Is Third-Party Liability and Bodily Injury Insurance?
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This page was written and reviewed by Michael J. Cefali, Esq. Attorney Cefali is a founding partner of Cefali & Cefali, APC, based in San Juan Capistrano, CA. He holds a Juris Doctor from Chapman University Fowler School of Law and a B.A. in Global Studies & Maritime Affairs from the California Maritime Academy. Widely recognized for his advocacy in personal injury law, he has secured multi-hundred-thousand-dollar settlements in motorcycle accidents, hit-and-runs, and red-light collision cases. He maintains a perfect 10.0 “Superb” rating on Avvo.
Beyond his legal practice, Mr. Cefali actively supports his community through the Rotary Club of San Juan Capistrano, contributes to housing and meal programs for those in need, and enjoys fishing and spending time with his rescue dogs.
The date below reflects when this page was last reviewed for accuracy. Please see our Editorial Guidelines.
What Is Third-Party Liability and Bodily Injury Insurance?
Third-party liability insurance is the part of an auto policy that pays for injuries and damage the insured driver causes to other people, not to themselves. When you are hurt in a crash caused by someone else, you file a claim against their third-party liability coverage. This guide explains what third-party liability and bodily injury coverage are, how they differ from first-party coverage, what California requires, and why the at-fault driver's policy limit matters so much to an injury claim. It is general information; for advice about a specific claim, speak with a car accident attorney.
Third-party liability insurance is coverage that pays for the injuries and property damage an at-fault driver causes to other people. In insurance terms, the "first party" is the policyholder and their insurer, and the "third party" is the other person harmed in the accident. So when a driver injures someone else, that injured person is the third party, and they make a claim against the at-fault driver's liability coverage.
The key thing to understand is what it does not cover: third-party liability insurance does not pay for the at-fault driver's own vehicle or their own injuries. It exists to compensate the people they harm.
What is third-party bodily injury liability coverage?
Liability coverage has two parts: bodily injury liability and property damage liability. Bodily injury (BI) liability is the part that pays for the harm to a person. If you are injured by an at-fault driver, their bodily injury liability coverage can pay for your:
Medical bills and rehabilitation
Lost wages
Pain and suffering
Legal fees, and funeral costs if the accident was fatal
Property damage (PD) liability is the separate part that pays to repair or replace the other person's vehicle or property. Together, these two make up the "liability" coverage every California driver is required to carry.
First-party vs. third-party coverage: what's the difference?
The simplest way to keep them straight is by who gets paid. First-party coverage protects you and your own property; third-party coverage protects the people you harm.
First-party coverage pays you directly, regardless of the other driver. It includes collision (your car's repairs), MedPay (your medical bills), and uninsured/underinsured motorist coverage (your injuries when the at-fault driver has no or too little insurance).
Third-party coverage is the at-fault driver's liability insurance, which pays the person they injured. When you are the injured victim of someone else's negligence, this is the coverage you claim against.
In a typical injury claim, you (as the third party) file against the at-fault driver's bodily injury liability policy. If that coverage is not enough, your own first-party uninsured/underinsured motorist coverage may fill the gap.
How much third-party liability insurance does California require?
As of January 1, 2025, under Senate Bill 1107 (the Protect California Drivers Act), every California driver must carry minimum liability limits of 30/60/15:
$30,000 for bodily injury to one person
$60,000 for total bodily injury per accident (across everyone injured)
$15,000 for property damage
These limits replaced the old 15/30/5 minimums that had been in place since 1967, and they are scheduled to rise again to 50/100/25 in 2035. It is important to know these are a legal floor, not a recommendation, and many drivers carry only the minimum.
Why the at-fault driver's policy limit matters to your claim
Here is the practical problem for injured victims: the at-fault driver's bodily injury liability coverage only pays up to its limit. If a driver carries the California minimum, the most their policy pays for your injuries is $30,000, even if your medical bills and lost wages are far higher. A single surgery or hospital stay can exceed that.
When the at-fault driver's coverage is not enough, an attorney looks for other sources of recovery, most commonly your own underinsured motorist (UIM) coverage, and sometimes additional liable parties (for example, an employer if the driver was working, or a bar under narrow circumstances). This is why, after a serious crash, identifying every applicable policy is one of the most valuable things a lawyer does. It is also why carrying strong uninsured/underinsured motorist coverage on your own policy is worth considering; California insurers must offer it, though you can decline it in writing.
Talk to a California car accident attorney
If you were injured by another driver, you will be dealing with their third-party liability insurer, whose goal is to pay as little as possible. An attorney can value your claim correctly, push back on lowball offers, and identify every policy available to cover your losses. Cefali & Cefali represents injured people across California. To learn more, see our Orange County personal injury page, or call (949) 325-7790 for a free, no-pressure consultation.
Michael Cefali is a dedicated accident attorney based in San Juan Capistrano, California, committed to securing justice and fair compensation for accident victims.
A graduate of Newport Harbor High School, he went on to earn his Bachelor’s degree in Global Studies and Maritime Affairs from the California Maritime Academy, followed by his Juris Doctor from Chapman University School of Law.
Deeply invested in his community, Michael is an active member of the Rotary Club of San Juan Capistrano, contributing to efforts that provide meals, housing, and support to those in need. Outside of his legal work and volunteer service, he enjoys fishing in Dana Point and spending time with his three rescue dogs—a Chihuahua, a Spaniel mix, and a Shepherd mix.
Driven by his strong belief in justice and fairness, Michael remains steadfast in advocating for individuals harmed by the negligence or inaction of others.
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