How do first party and third
party insurance work
accidents. To avoid being taken advantage of, it is important that you under-
stand how these types of insurance work and the rights and responsibilities of
all parties involved.
“First party” and “third party” are terms that refer to your relationship with an
insurance company. Your insurance company, the one that you pay premiums
to and have a contractual relationship with, is considered a first party insurer.
And the insurance they provide that covers your personal damages is called
first party insurance. Some examples of first party insurance include:
• Collision Coverage (COLL)
• Comprehensive Coverage (COMP)
• Personal Injury Protection (PIP)
• Uninsured Motorist Coverage (UM)
• Underinsured Motorist Coverage (UIM)
Also, if you are a passenger in someone else’s car or a pedestrian hit by a car,
the driver’s PIP coverage will be considered first party, even though you do not
pay premiums to the driver’s carrier.
First-party insurance providers owe a high legal duty to those they insure.
If an insurance company does not have a direct relationship with you, but it’s
insured may be liable to you for damages, the company is considered a third
party insurer. In other words, a third-party insurer is typically the insurance
company of the other party involved in the accident. Some examples of third
party insurance include:
• Bodily Injury Liability Coverage (BI)
• Property Damage Liability Coverage (PD)
