First-Party Claims

First-Party Claims

A first-party claim is an insurance claim you file with your own insurance company under a policy you paid for. The name comes from the contract: you are the first party, your insurer is the second party, and everyone else in the world is a third party. After a car accident or property loss, injured people often have both a first-party claim against their own carrier and a third-party claim against the at-fault person's carrier — and the two are governed by very different rules.

First-party vs. third-party: the usual confusion

People routinely mix these up, and the distinction matters:

• First-party claim — a contract claim. Your insurer owes you whatever the policy promises, and it owes you a duty of good faith and fair dealing in handling the claim.
• Third-party claim — a fault-based claim. The other driver's insurer owes you nothing by contract; it pays only because its insured is legally liable to you, and only after fault and damages are established.

A practical consequence: your own insurer has legal duties to you that the other side's insurer simply does not. The other carrier can lowball you without breaching any duty owed to you. Your own carrier cannot drag its feet or deny a valid claim without exposure to a bad faith lawsuit, which in many states allows recovery beyond the policy limits.

A worked example

Suppose you are rear-ended by a driver carrying the state-minimum $25,000 in liability coverage. Your medical bills reach $40,000, and you miss six weeks of work at $1,200 per week — another $7,200 in lost wages, putting your economic losses near $47,000 before pain and suffering is even discussed.

The at-fault driver's insurer pays its full $25,000 policy limit. That's the third-party recovery, and it's exhausted. You then turn to your own policy. If you carry $100,000 in underinsured motorist (UIM) coverage, you make a first-party claim with your own carrier for the shortfall. If you also carry MedPay or personal injury protection (PIP), those coverages may have already paid early medical bills regardless of who was at fault. Without those first-party coverages, you'd be left chasing the underinsured driver personally — usually a dead end.

Common types of first-party coverage

• Uninsured/underinsured motorist (UM/UIM) — fills the gap when the at-fault driver has no insurance or too little.
• PIP and MedPay — pay medical expenses (and, for PIP, often lost wages) without regard to fault.
• Collision and comprehensive — repair or replace your own vehicle.
• Homeowners and disability coverage — first-party claims outside the auto context.

Two deadlines, not one

The statute of limitations for suing the at-fault driver and the deadline for a first-party claim are separate. First-party deadlines may come from the policy itself or from contract-law limitations periods, and they vary by state and coverage type. One can expire while the other is still open, so never assume that missing one closes both doors.

Because the insurer holds the policy, the adjusters, and the playbook, disputes over first-party claims — especially UIM valuations and bad-faith denials — are an area where having a lawyer reviewing the file early tends to change outcomes.

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