The Difference Between 1st Party and 3rd Party Insurance Claims

Insurance terms can be confusing to those not in the industry.  One of the most misunderstood concepts is the difference between a first party insurance claim and a third party claim. Those who have been injured and need the assistance of a personal injury attorney rarely know whether their claim should be made as a first party claim or third party claim (or both).  Here’s a brief explanation to help you understand the difference.

First Party Claim

A person who purchases an auto insurance policy, homeowner’s or renter’s policy, has a contract with the insurance policy. In exchange for the payment of premiums, the insurer agrees to pay for losses covered under the policy. For example, if there is a home fire the insurer will pay for losses sustained by the fire, up to the amount covered in the policy.

For auto insurance, if a person is injured in a collision, he or she may be able make a claim for the medical expenses incurred, wages lost or other related damages, up to the amount covered in the policy. If the driver has comprehensive coverage, a separate first-party claim can also be made to repair physical damage to the vehicle.

In many of these cases, the party making a claim against their own insurance company will not have to demonstrate any fault of another party. This is because the damages to be paid are determined by the terms of the contract, and not by traditional legal standards of fault and liability.

 

Third Party Claim

All auto policies in Texas, and most property insurance policies, also provide third-party liability coverage. What that means is that if the owner of the insurance policy or any other individual who is “covered” under the policy causes an accident that injures a third party, that third party may make a claim against the vehicle owner and/or driver’s third-party liability coverage for the damages incurred as a result. This is known as a third party claim.

In third party claims, the injured person normally has to prove that the insured was legally responsible for causing the injury. Typically, this is accomplished by proving the insured was negligent. If the injured party can prove negligence, he or she can recover their damages from the insured, including damages for past and future medical expenses, pain and suffering, mental anguish, disfigurement, and loss of earning capacity.

The Austin personal injury lawyers at Terry & Kelly, PLLC have vast experience in handling both first and third party claims against insurers. Those injured due to the negligence of another, or those who have been denied by their own insurance company, are encouraged to contact us at 512-910-2000 for a free case evaluation.

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