Rail transit systems are one of the most important and popular types of transit systems used daily in metropolitan areas all around the world. The third rail is one of the providers of traction power in electrified rail systems, but it faces several issues, such as insulator failures. The purpose of this study is to investigate the causes of insulator failures, which have not been comprehensively studied and presented in the literature. To accomplish this objective, eight transit systems with third rails were selected to (1) investigate the characteristics of third-rail systems, (2) determine the causes of insulator failures, (3) analyze the costs associated with insulator failures, and (4) determine mitigating practices to reduce the number and cost of insulator failures. After a thorough literature review, details of eight case studies were collected from different transit agencies, and their subject matter experts were asked to complete a survey and provide input. The results revealed that a build-up of dirt was the major cause of the 17 identified causes of insulator failures; carbon dust and dirt were identified as the most present particles in third-rail systems. It was noted that transit agencies often implement multiple mitigating practices such as cleaning the insulator, performing visual inspections, and conducting regular maintenance to reduce the number and cost of insulator failures. The findings of this study will help decision-makers for transit systems make timely decisions to prevent third-rail insulator failures and adopt appropriate practices that best fit their transit system.