For whom is third-party insurance primarily designed?

Third-party insurance is primarily designed to protect the other party involved in an accident. This type of insurance provides coverage for the legal liability of the policyholder towards third parties. In the context of motor insurance, if the insured driver causes an accident that results in damage to another person's vehicle or injuries to another individual, the third-party insurance policy will cover the costs associated with those damages or injuries.

The key purpose of this insurance is to ensure that victims of accidents caused by the policyholder can be compensated without relying on the policyholder's personal finances. It emphasizes the responsibility of the insured towards others, fulfilling the legal requirement for motor insurance in many jurisdictions while offering peace of mind to individuals on the road.

The other options do not accurately represent the primary focus of third-party insurance, as this type of coverage does not primarily protect the insured individual, the insurance company, or the policyholder's family members directly.