What You Should Know
- First-party insurance claims are filed with your own provider, covering losses or damages to your property or yourself
- Third-party insurance claims involve you, your insurer, and another party, protecting against liability for damages or loss caused to others
- In either situation, you’ll need to notify the insurer, get a claim number, work with a claims adjuster, provide relevant information, and negotiate or file in court if needed
Getting into an accident or suffering property damage can be a stressful experience. Navigating the property damage insurance claims process can become overwhelming, especially when terms like “first-party claim” and “third-party claim” come into play.
Yet, understanding the difference between a first-party claim and a third-party claim is essential, as they determine how you and your insurer handle the claims process. We’ll break down the difference for you in this article.
First-Party Insurance Claims: When It’s You and Your Insurer
First-party insurance claims are filed directly with your own insurance provider to cover losses or damages to your property or yourself. These claims often involve expenses like rental cars, medical bills, collision repairs, and property damage.
Examples of first-party insurance include:
- Comprehensive coverage claims: This covers damages to your car caused by events other than a collision, such as vandalism or natural disasters (find affordable comprehensive auto insurance coverage).
- Personal Injury Protection (PIP) claims: This covers medical expenses and lost wages for you and your passengers in the event of an accident (find affordable personal injury protection (PIP) auto insurance coverage).
- Uninsured/Underinsured Motorist (UM/UIM) claims: This covers damages to your vehicle and medical expenses if you’re involved in an accident with a driver who has insufficient or no insurance.
- Rental reimbursement claims: Some auto insurance covers rentals while your vehicle is being repaired after an incident.
First-party insurance is regulated by state laws that require insurers to act in good faith when handling claims. This means they must uphold their contractual obligations and not intentionally delay, deny, or underpay claims without proper justification.
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Third-Party Insurance Claims: When Another Party Is Involved
Third-party insurance claims involve three parties: the insured party (you), the insurer (your provider), and another individual (the third party). These claims protect you against liability for damages or loss caused to another person or their property.
Examples of third-party insurance include:
- Bodily injury liability claims: This deals with the other party’s medical expenses, lost wages, and pain and suffering resulting from the accident.
- Property damage liability claims: These relate to repairs or replacement costs for the other party’s vehicle or property damaged in the accident (find affordable property damage liability (PDL) auto insurance coverage).
Third-party claims are filed with the insurance company of the person responsible for the loss or damages. For instance, if you are involved in an auto accident caused by another driver, you would file a third-party claim against their insurer.
The Insurance Claims Process: A Step-by-Step Guide
Regardless of whether you’re filing a first-party or third-party claim, the process is relatively similar. Follow these steps to ensure a smooth and efficient experience.
Obtain a Police Report for Your Insurance Claim
A police report is an essential document that can significantly impact your insurance claim. This report contains an official record of the incident, including details about the parties involved, any witnesses, a summary of events, and, in some cases, the officer’s determination of fault.
After a minor accident, you may need to research if you need to file a police report after an accident, as state laws differ regarding how to handle fender-benders and minor damage.
Notify the Insurance Company
As soon as possible after an incident, file an auto insurance claim with your insurance provider to report what happened. This timely communication allows the company to start processing your claim and, if necessary, involve a third-party insurance company.
Get a Claim Number
Once you’ve reported the incident, the insurer will assign a unique identifier called a claim number to your case. Keep this number handy, as it helps track your claim’s progress and serves as a reference for any future communications with your insurance company.
Work With a Claims Adjuster
A claims adjuster is an expert who assesses the damages sustained in an incident and determines the appropriate compensation amount. They may visit the scene of the accident or inspect your vehicle to gauge repair costs accurately.
Be prepared to answer questions from the adjuster and provide any necessary documentation to support your claim.
Provide Relevant Information
To ensure a smooth claims process, submit all relevant documents, photos, and statements that help establish the facts of the incident. This can include police reports, witness testimonies, medical bills, repair estimates, and any other evidence that supports your claim.
Negotiate or File a Formal Claim in Court if Necessary
In some cases, you might need to negotiate with your insurance provider or the other party’s provider for fair compensation. If negotiations fail or disputes arise, consider working with an attorney to file a formal claim in court.
A legal professional can help protect your rights and ensure you receive appropriate compensation for damages and losses incurred during the incident.
A Final Word on the Difference Between a First-party Claim and a Third-party Claim
Understanding the differences between first-party and third-party insurance claims can help ease the stress associated with filing for compensation after an accident or property damage event.
Familiarize yourself with these concepts, and don’t hesitate to seek legal assistance if you suspect bad faith practices or require guidance through the claims process.
Frequently Asked Questions
Can I file both a first-party and a third-party claim simultaneously?
Yes, in some cases you may be able to file both first-party and third-party claims. For instance, if you have collision coverage and are involved in an accident with an at-fault driver, you can file a first-party claim for your vehicle’s repairs and a third-party claim for the other driver’s injuries or property damage.
How long do I have to file an insurance claim after an accident?
The time frame for filing an insurance claim varies depending on your state laws and the specific terms of your insurance policy. It is best to report the incident to your insurer as soon as possible and consult your policy for any deadlines.
What if the other party involved in the accident doesn’t have insurance?
If the other driver involved in the accident does not have insurance or has insufficient coverage, you may need to rely on your uninsured/underinsured motorist (UM/UIM) coverage or pay for repairs out of pocket.
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Leslie Kasperowicz
Farmers CSR for 4 Years
Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance…
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