Many states have automotive laws that require all licensed drivers to carry a minimum amount of liability coverage against any damages an accident may cause to another vehicle or passenger. The same protection is what drive homeowners to purchase homeowner’s insurance. Regardless of the type of coverage, you will be selecting from first party coverage or third party coverage.
What You Need to Know
In talking about first vs. third party coverage, the primary differences lie with the individuals that are a part of the insurance claim. With a third-party claim, there will be three parties. One is the insured individual, the next is the insurance company, and the third is another individual. This other party is not a policyholder and is the one bringing the liability claim. There is no contract between the individual bringing the claim and the insurance company, allow this party to make claims beyond the coverage terms on the original policy.
First-party claims are between the insurance company and the actual policyholder. These claims are contractual and contingent upon the language of the written policy. However, first-party claims may not always be settled according to the terms of the contract, resulting in lawsuits against the insurance company for damages.
Know What to File
It is important to know what kind of claim is being filed against you in the event of a car accident or when damage occurs to your home. This makes a difference in what your insurance company may pay.