Topics covered:

Who is a third-party beneficiary?
Standing as a third-party beneficiary
Rights of third-party beneficiaries

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Who Is a Third-Party Beneficiary?

Often insurance contracts provide coverage for the property of those who are not parties to the actual contract. Third parties may be added as additional insureds to a policy. The Building and Personal Property Coverage Form (CP 00 10 06 07) also provides coverage for the personal property of others that is in the care, custody, or control of the insured and that is located in or on the building described in the declarations or in the open or in a vehicle within a hundred feet of the premises. In this case, “others” are not named in the policy, but they may still exercise some of the same rights as the named insured.

Those additional insureds, “others,” or “unnamed” insureds may be classified as third-party beneficiaries of the policy. Black's Law Dictionary defines a third-party beneficiary as a “person not a party to an insurance contract who has legally enforceable rights thereunder.” A third-party beneficiary may have the right to bring a direct cause of action against the insurer. And, while the commercial property conditions stipulate that legal action may only be brought against the insurer if there has been full compliance with the terms of the coverage part, courts have held that third-party beneficiaries may recover even when the insured has no right to recovery.