Even though most people in the U.S. have purchased car and homeowners insurance to protect their vehicle and property, many of them don’t understand the difference between first-party vs. third-party insurance claims. However, knowing how these two claims differ is important.
The first party and third party are two different ways to make insurance claims. A person usually files a first-party claim with their insurance company but files a third-party claim with the at-fault driver’s insurance company. On this page, we explain the difference between first-party and third-party insurance claims and how you can make a claim that helps you recover the compensation you need to recover from an accident.
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What Is a First-Party Insurance Claim?
First-party insurance is the coverage a policyholder obtains to cover their losses. A first-party insurance claim usually occurs when the policyholder files a claim with their insurance provider after an accident. After sustaining an injury in a car accident, you’re supposed to notify your insurer and ask the company to compensate you for your losses as per the contract terms.
Some types of first-party insurance claims include:
- Uninsured motorist coverage (UM)
- Underinsured motorist coverage (UIM)
- Medical payments coverage under a Med Pay policy
- Rental coverage in case you need to rent a car while you wait for yours to be repaired
- Personal injury protection (PIP)
- Collision coverage
Review Your Policy to Understand What You Can Claim from Your Insurer
As the policyholder, your insurance contract terms will dictate what damages you can claim from your first-party insurance. If you have coverage for a specific loss, you need to submit an insurance claim and ask the insurance provider to pay you. The insurance provider may pay up to the policy limits for that kind of damage or loss.
What Is a Third-Party Insurance Claim?
Third-party insurance is usually purchased to protect the insured against liability for damages or losses they may cause to another person or their property. A third-party insurance claim is when you claim against someone else’s insurance policy. You can file a third-party insurance claim when someone else’s negligence harms you or your property, and they have an insurance policy that covers that type of third-party liability coverage.
Common types of third-party insurance claims include:
- General commercial liability coverage
- Umbrella insurance policies
- Commercial auto liability coverage
- Professional or public liability insurance
- Product liability insurance
- Animal liability insurance
- Liability for officers or directors of a company
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How do You Know Which Claim to Submit?
To decide whether to file an insurance claim, you must determine who is at fault for the accident. In most auto accidents, the person at fault pays for the damages and losses. However, if fault isn’t immediately apparent, the insured victim might need to bring a first-party insurance claim and a third-party insurance claim.
If you have the right insurance coverage, you may also file an insurance claim with your insurance provider if the other party is uninsured or underinsured. You can also consult a car accident lawyer or law firm about your insurance claims and injury case. The compensation you could recover and how long it takes to file an insurance claim will depend on several factors that your legal team can advise you on.
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Bad Faith in Third-Party Insurance Claims
A policyholder can file a bad faith claim against an insurance provider for its unlawful and inappropriate handling of insurance claims. Since this violates the fiduciary-type relationship between the insured and the insurance company, the insured can file a bad faith claim against the insurer for these unlawful practices and violations.
The following are examples of bad faith insurance claims:
- The insurance company rejects a claim without an explanation.
- The insurance company delays payments without a legitimate reason.
- There was a misinterpretation of the law or policy contract.
- The insurance company changes the contract after a claim is filed.
- The insurer fails to investigate the claimant’s damages.
- The insurer offers less money than the claim’s value.
- The insurer uses threat-based language.
- The insurer refuses to pay.
- The insurer cancels the policyholder’s coverage to avoid paying damages.
Contact the Law Offices of Anidjar & Levine Today for Help
When you’ve sustained injuries or suffered any loss in an auto accident, you can file a first-party or third-party insurance claim to receive compensation. Suppose you feel that an insurance company is acting in bad faith. In that case, you could seek legal counsel and representation from a car accident attorney.
The legal team at the Law Offices of Anidjar & Levine is ready to help you seek the compensation you are due after an accident. We can also answer your questions about first-party vs. third-party insurance claims and more. Contact us today at 1-800-747-3733 to learn more during a free consultation.