When you’re involved in an accident, it can be confusing to know how the insurance coverage will work. Who is at fault is often a determining factor of whose insurance will pay – whether it will be a first or third-party claim – but the outcome isn’t always straightforward.
Read on to learn more about first and third-party insurance and how people make the claims.
First-Party vs Third-Party Insurance
While most people understand that insurance covers various types of situations, from vehicle accidents to property damage and inclement weather, there is a lot of confusion surrounding first-party vs third-party insurance.
Generally speaking, first-party insurance refers to the insurance held by the policyholder. In contrast, the third-party refers to insurance claims made against an insurance policy by someone who is not the policyholder.
First-party insurance is coverage that you purchase to cover your own losses. For individuals, a first-party plan usually takes the form of health, property, or vehicle insurance.
Example insurance coverages include:
- Liability Insurance
- Uninsured Motorist Protection (UM)
- Underinsured Motorist Protection (UIM)
- Personal Injury Protection (PIP)
- Medical Payments Coverage (Med Pay)
- Collision Coverage
- Comprehensive Coverage
- Rental Reimbursement
- Emergency Road Services
- Customized Parts and Equipment
- Gap Insurance
- Personal Umbrella Protection (PUP)
These types of provisions cover you financially in the event of damage to your vehicle or property, or if you accrue medical expenses. You may also be protected if you, your vehicle, or your property injures someone else or damages their property.
Businesses can also purchase first-party insurance, which will protect their building, employees, or the company itself if it is held liable for any incident. First-party insurance can often prevent businesses from having to face significant lawsuits if they’re responsible for an injury or damage.
First-party insurance may also cover you if you’re involved in an accident that isn’t your fault, and the other party doesn’t have insurance. Your insurance will often then pay your costs. If your first-party insurance has this feature, then you should always be covered, whether the incident is your fault or someone else’s.
In a first-party claim, the policyholder, or person who has the insurance, files a report directly against their own insurance policy. The policyholder usually has to pay an agreed-upon deductible, and then the insurance will cover the rest of what is due.
The insurance company may not always approve the claim. They will review the policy and see what is covered. If the claim falls outside what is in the policy, the insurance company will refuse to pay.
Examples of a First-Party Insurance Claim
A homeowner’s house has extensive damage after a hurricane. They file a claim against their insurance to repair the damages.
A vehicle owner causes a fender bender in a parking lot. They file a claim against their insurance to have their car repaired.
A person falls ill and requires a two-week hospital stay. They file a claim against their insurance to help cover their medical costs.
What to Do When Your First-Party Insurance Doesn’t Cover a Claim
In some cases, your insurance company will refuse to cover a claim. They may base their refusal upon what is in your policy.
If something isn’t covered, then they won’t pay.
However, situations aren’t always as black and white as what is in a policy. Sometimes the language may be vague, or it may not take into account an unforeseen situation.
Bad Faith Insurance Practices
In some instances, you may decide that your insurance company is acting in bad faith if they choose to deny a claim. You may think that your policy does cover the claim they reject.
There are several ways in which an insurance company can act in bad faith.
In some bad faith cases, the insurance company will pay you, but it is less than what you require to take care of the issue. The payment may also be less than what they’re required to pay you.
In other cases, the company might delay or outright deny payment for a claim. They may give very little by way of an explanation.
In many cases, the insurance company doesn’t investigate the claim properly to determine what coverage is needed. They may also require more work than necessary on your part to try and make you give up if it seems like too much trouble.
Sometimes they may try to put you off by getting confrontational, making it seem like you’re in the wrong, or neglecting to inform you of any necessary appeals process once your claim is denied.
The attorneys at Stoy Law Group fight these frivolous lawsuits!
If You Feel Like Your Claim Was Wrongfully Denied
If your insurance company denies your first-party insurance claim, you may think there is nothing you can do. You may feel especially overwhelmed if you have no other way to pay for the damage or care.
However, if your insurance company is acting in bad faith, you can seek legal help to help you get the payment you need and deserve.
A lawyer can go through your policy to help you to determine if the insurance company is acting in bad faith. They can then advise you of the best action to take and help you get the money you need to cover your costs.
Can You File a Lawsuit Over a First-Party Insurance Claim?
There are several reasons why you may choose to file a lawsuit over a first-party insurance claim.
Your insurance company may deny your request, or they may give you much less than you need to cover your damage or injury expenses. They may use other bad faith tactics, such as making you jump through hoops of paperwork and documentation or dodging your phone calls.
If you believe that your insurance policy covers your incident, you can file a lawsuit against your insurance company.
Our attorneys can help you figure out if your insurance company is acting in bad faith. If they are, we can file a lawsuit to get you the money you deserve to cover your expenses.
Third-party insurance is a part of your insurance policy that covers any damage or injury you may cause. If you or your property causes harm to another person or property, you can be held liable for any costs incurred.
In these situations, you may find yourself paying thousands of dollars or in the middle of a lawsuit if you can’t cover the costs. Third-party insurance can help you avoid these unforeseen expenses.
You can get third-party liability insurance with home, vehicle, or business coverage. This provision is added to your first-party insurance coverage. Your policy will outline the types of third-party liability it will cover.
Examples of Situations Where You May Need Third-Party Insurance Coverage
There are many situations where third-party insurance can come in handy.
For example, you may cause a car accident, injuring the other driver, and damaging their car.
At your house, you may be cutting down a tree. You could misjudge where you’re cutting, and the tree could fall and damage your neighbor’s house.
In both cases, your third-party insurance will help you pay for the damage.
What Is a Third-Party Claim?
If you are injured, or your property is damaged due to another person’s negligence, you may choose to file a third-party insurance claim.
This type of claim is a report that you file against the other person’s insurance. If that person has an insurance policy that includes third-party insurance, your costs may be covered.
In one third-party insurance example, another motorist may run a red light and strike your vehicle. You may suffer injuries and damage to your car. The other driver should be held responsible.
In most cases, the other driver’s insurance will pay for your damages.
In another example, you could slip on the floor in a business because the floor is wet, yet the business owner neglected to display a wet floor sign. You may suffer a broken bone. You would file a third-party insurance claim to pay for your medical expenses.
If your neighbor throws a baseball and breaks your window, you’ll need to have it repaired. You would then file a third-party insurance claim for property damage.
What Is Covered and Not Covered by Third-Party Insurance?
Whether you are applying for third-party insurance or filing a claim, you’ll need to know what is covered in third-party insurance. Every policy is different, so you’ll need to read the fine print.
In some cases, the wording can be vague.
An insurance company may deny a third-party claim settlement, citing the ambiguous language as their reason. If you feel that you deserve compensation and that the other insurance company is acting in bad faith, a lawyer can sort through the policy for you and help you get what you deserve.
Will a Third-Party Claim Affect My Insurance?
Typically, third-party claims are separate from your insurance. If you are worried about your premiums being affected, you can file the third-party claim directly with the insurance company of the person at fault.
However, if you don’t wish to deal with the other person’s insurance company, you’ll sometimes have the option of your own insurance company handling it.
You’ll have to file a first-party claim with your insurance, who will then file a third-party claim with the other person’s insurance company on your behalf.
Can You File a Lawsuit Over a Third-Party Insurance Claim?
In many cases, the insurance company may reject your third-party insurance claim. Many insurance companies try to get out of paying compensation for those who don’t hold insurance with them. They may deny your request entirely, or they may try to lowball and give you less than you need to resolve your issue.
In these situations, you may have to turn to your own insurance policies to get the money you need. You may wind up paying a deductible, and your premium may go up. If another party caused the accident, it’s not fair for you and your insurance company to be forced to pay.
If you feel the third-party insurance company is in the wrong, you can bring a lawsuit against them.
Our lawyers have extensive experience in dealing with denied third-party insurance claims, and we can help you get the compensation you deserve to cover your losses.
Frequently Asked Questions
Here are a few more questions you may have about first and third-party insurance claims.
How Do You File a Third-Party Insurance Claim?
After an incident, you and the other person should exchange insurance information. You’ll need to contact your insurance provider and may wish to contact theirs as well.
Typically, your insurance company will handle the claim with the other insurance company.
The third-party insurance company may require you to get an estimate for the cost of repair. They may also send out an adjuster to decide if the claims are valid and what should be covered. You may also need to figure out what is covered and not covered by third-party insurance.
How Long Do You Have to File a Third-Party Insurance Claim?
The law may vary from state to state, but most states will allow up to 30 days after the accident to file a claim. It’s best to start gathering documentation, such as paperwork, pictures, and estimates, as soon as possible after an accident.
Is First-Party Insurance Better than Third-Party Insurance?
There are positives and negatives to using first-party or third-party insurance.
Your insurance company will likely be easier to work with, as you have a policy with them. However, if the accident wasn’t your fault, the other person’s insurance should pay. If you use your insurance, you could face a deductible and higher premiums.
Contact Stoy Law Group, PLLC.
When you’re involved in any sort of accident, you can typically rely on a first-party or third-party insurance claim to help you cover your costs and receive any compensation.
However, there are cases where insurance companies will act in bad faith. They may offer you less compensation than you’re entitled to, or they may refuse to pay outright.
If you feel your insurance company or a third-party insurance company is acting in bad faith or would like more information about these two types of insurance claims, you can call Hutchison and Stoy for help.