The article elaborates the externality of motorcycles on the risk of automobile liability insurance, probing into the risk factors of automobile third party liability insurance by adopting locomotive density as its main negative factor of externalities. The article also examines the reasonability of current insurance rate on automobile insurance, applying some risk factors other than the characteristics of human or vehicle. On one hand, the article studies the relationship between the density of locomotive distribution and the incidence of traffic accidents in each administrative area in Taiwan. On the other hand, considering the low insurance rate in the automobile insurance market, it further discusses if the externalities may burden the P&C insurance industry with high insurance cost and should be considered for insurance rate calculation. Moreover, with the state-of-the-art technology, PAYD(pay-as-your-drive), the risk factor of externalities could be applied to the future rate system of automobile third party liability, making the insurance rate more fair and reasonable. By means of sample observation, assumption establishment, and the empirical research of regression model, the study concludes that there is relationship between the externalities which is locomotive density and the probability of claims on automobile third party liability. Hope the externalities could be applied as a new risk factor to calculate the insurance rate of automobile third party liability insurance in the P&C insurance industry.