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First-Party vs. Third-Party Insurance Claims

Posted in Car Accidents on October 12, 2020

Filing an insurance claim will start a series of events that should end in you receiving financial compensation for your damages. The type of insurance claim you file will depend on liability for your accident. In Texas, the party that causes an accident will be the one responsible for paying for victims’ losses. Sometimes, however, this party is unavailable or uninsured. Whether you need to file a first-party or third-party insurance claim for benefits will depend on the coverage available.

What Is a First-Party Insurance Claim?

A first-party insurance claim is one you file with your own insurance provider. The law requires every driver in Texas, for example, to carry automobile insurance. You may also have homeowners insurance, renters insurance, health insurance and other types of policies. If you caused your own injuries in Texas, you will file a first-party insurance claim with your own provider for benefits.

You may also file a first-party claim if the at-fault party does not have insurance. You could file an uninsured or underinsured motorist claim with your own company, for instance, after a collision with an uninsured driver or a hit-and-run accident. During a first-party insurance claim, you will negotiate a settlement award with your own insurance company. It can help to understand the language and details of your policy, including coverage types and limits. That way, you can be informed during negotiations with your insurer.

First, call your insurance provider to notify them of your accident. Cooperate with the insurance process, answering the questions asked and providing any additional information necessary. Then, ask the insurance company to pay you a fair amount for your medical bills, property repairs and other damages. Your insurer will respond with either a settlement offer or a reason for denying your claim. You will need to have the right type of insurance for a successful first-party claim.

What Is a Third-Party Insurance Claim?

A third-party insurance claim seeks compensation from another person’s insurance company. It is a claim against the policyholder, not the insurance company itself, that requests compensation from the individual for negligently causing the accident and injuries in question. Instead of paying out of pocket, the individual can turn to his or her insurance company to pay for damages, in most cases. Bringing a claim against a person or party for negligence is generally synonymous with filing a third-party insurance claim.

One of the main differences between a first-party and third-party insurance claim is the fiducial duty owed to the policyholder. With a first-party claim, your insurance company owes you a duty to act in good faith. As an insured policyholder, you have a contract with the insurance company that creates a fiduciary relationship under the Texas Insurance Code. You do not, however, have this fiduciary relationship with someone else’s insurance company. Instead, the insurance company will owe a duty of care to its insured.

If your insurance company breaches its fiduciary duties to you, you may be able to file a lawsuit against the provider for a violation of the Insurance Code. A bad-faith insurance lawsuit alleges that the insurance company did not handle your claim according to the rules of your contract. A successful bad-faith insurance claim for a violation could result in financial compensation for your losses. You could recover treble damages – three times the amount your insurance company originally would have paid – if you can prove an intentional code violation.

Tips for Negotiating an Insurance Claim

Whether you need to file a first-party or third-party insurance claim in Texas, hire an attorney for assistance going up against the insurance company. Insurers often put their bottom lines over their clients. An insurance provider may intentionally make it difficult for you to recover fair financial compensation for your past and future losses. Having an attorney negotiate your first-party or third-party insurance claim for you can improve your chances of a positive outcome.