What is a third party loss?

A third-party loss refers to a situation where an individual or entity suffers damages or losses due to the actions or negligence of another party, who is neither the victim nor the one responsible for the damage. In insurance terms, it often involves claims made by a third party against an insured party's liability coverage. This type of loss typically arises in scenariOS like accidents, where the injured party seeks compensation from the at-fault party's insurance.