What Is the Difference Between First-Party and Third-Party Insurance Claims?
In an auto accident who pays for the damages? The short answer is the Insurance company, but which one: theirs or yours? That depends on where you file a claim.
First-party insurance claims
Imagine that as you are driving in traffic in January snow, and the truck in front swerves to avoid a traffic cone. You manage to slam on your brakes, but crunch, the truck behind you cannot stop as fast, and your bumper looks like a smashed Twinkie.
To file a first-party insurance claim, you call your insurance agent. She helps you get a rental car and an estimate to fix your bumper. If the car isn’t a total loss, your insurance will cover the repairs.
However, in a first-party claim, you are responsible for paying the deductible if your policy has one. You can recoup those costs if you were not a fault for the accident, but the process is a long one. Your insurance company will attempt to get money from the at-fault party’s insurance company to cover the accident. If the insurance company is successful, they may send a refund on your deductible.
Third-party insurance claims
A few years later, a distracted driver backs into you in front of your apartment. You are still not at fault for the accident, but this time you can file a third-party insurance claim. After you call your insurance company first (because you always should), you also contact the at-fault party’s insurance company and file a claim with them. You can usually find the other driver’s insurance information on the accident report given to you by police.
If there were no injuries, and the insurance company determines that their insured was at fault, the other driver’s insurance company can handle the claim for you. You will speak to that company about getting a rental car and getting your vehicle repaired.
However, use caution when talking to an insurance company. In accidents with injuries or serious damages, it is better to speak with your attorney before speaking to an insurance company. You may not have the negotiating power and experience to see whether or not you are getting fair compensation.