What term describes the situation when a beneficiary is defined solely due to the First Party's negligence?

The term that describes the situation when a beneficiary is defined solely due to the First Party's negligence is a third party. In insurance and liability contexts, a third party refers to someone who is not directly involved in the contractual agreement but may experience injury or loss as a result of the actions (or negligence) of one of the parties involved, often the First Party.

When the First Party (the insured individual) acts negligently and causes harm, a third party—who has no relation to the insurance contract—can emerge as a beneficiary entitled to seek compensation under that contract or through liability claims. Third-party claims typically arise in situations such as auto accidents, where the negligent driver (First Party) causes injury to another individual (Third Party).

Understanding the role of third parties is crucial, especially in evaluating liability and potential claims under various insurance policies. This distinction is vital in the field of public adjusting, where adjusters must navigate the complexities of claims involving multiple parties to ensure fair and just settlements.