If you’ve been in an accident lately you have likely had to deal with a lot of new insurance terminology. When you are talking to the insurance they talk about terms like “first party”, “second party”, and “third party.” These terms are confusing, but a little bit of explanation can help you understand and help you make better decisions. I’ll help you understand the difference between a first party claim vs a third party claim.
An insurance policy is an agreement between you and your insurance company to perform in a certain way if certain things happen. For the contract to be valid both parties must exchange something of value. In this case it is your premium for the repair coverage.
First Party Claim
The “first party” insurance, is your collision or comprehensive coverage on your policy. It’s considered first party insurance claim, because the second party (your insurance) pays the first party (you) to repair the car.
Third Party Claim
“Third party” insurance, is the liability part of your policy. This is because the liable insurance (second party) pays for the repair on behalf of the policy holder (first party) to a claimant (third party) for damages caused by the first party.
When you have a first party claim, it’s usually a pretty simple transaction that is spelled out in great detail in your insurance policy.
When you get into a third party claim, there is no contract and it opens up more opportunity for confusion, but also to negotiate. There are some items available to a third party claim that are not likely available in the first party claim. Items like OEM parts, diminished value, rental car, loss of use, loss, pain and suffering. These are all complicated negotiations, but because there is no policy or contract specifying how they will be handled, they are all negotiable.
When you’ve been in an accident, you likely want your car repaired quickly. If you turn your car into your insurance to pay for the repair, you are bound to the policy and will likely pay your deductible. That deductible will be sent back to you, once liability has been accepted. If you wait until liability has been accepted by the other party, you can turn in a claim to their insurance directly. This waives your deductible and opens up the negotiations. However, it can add weeks to the process.
I know that I have only briefly explained these terms and you may have many more questions. You still may not completely understand the first party claim vs a third party claim. If you want someone to help answer further questions, stop by and Collision Pros location in Northern California in Auburn, Chico, Red Bluff, Paradise, Loomis or Woodland, California.
