When you make an insurance claim, it is essential to know if the one you are making is first-party or third-party. The most significant difference between them is who is making it and who is responsible for paying.
What is a first-party claim?
A first-party claim is one you make directly with your own insurance company. You are the “first party” and the insurance company is the “second party.” This type seeks compensation for damages or losses you have personally experienced. For example, if your home sustains wind damage or your car is stolen, you would file a first-party claim with your property or auto insurer based on the terms of your specific insurance policy.
What is a third-party claim?
A third-party claim is one you file against another person’s insurance company. You are the “third party,” and the claim is against the policy of the at-fault individual or business. For example, if another driver causes an accident and damages your car, you would file as a third-party against their auto insurer with the purpose of receiving compensation for your injuries or property damage from the at-fault party’s liability coverage.
Obligations and goals for each type of claim
When it’s first-party, your insurance company has a contractual duty to handle it in good faith based on your policy. With a third-party claim, the other person’s insurance company owes no such duty to you. Instead, its primary obligation is to its policyholder, and the goal is to protect its client’s interests and financial well-being.
What to expect when filing a claim
Each type of insurance claim involves different parties, rules, and expectations. Knowing if yours is first-party or third-party helps you understand what to expect when you file.
