Molecular simulation methods such as Monte Carlo simulation and both equilibrium and nonequilibrium molecular dynamics are powerful computational techniques that allow the exact calculation of molecular properties with minimal approximations. The main approximations are the choice of intermolecular potential and the number of particles involved in each interaction. Typically, only pairwise interactions are counted using a simple effective intermolecular potential such as the Lennard-Jones potential. The use of accurate two-body potentials and calculations that explicitly include three or more body interactions are rare because of the large increase in computational cost involved. Here, we report recent progress in the use of both genuine two-body potentials and calculations involving three-body interactions. We show that in some cases, the contribution of three-body interactions can be accurately estimated from two-body interactions without the increase in computational cost involved in explicitly accounting for three-body interactions. As an example of the benefit of including three-body interactions, the improvement in the prediction of vapour-liquid equilibria is examined.