If you have an insurance policy, you may have questions about the differences between “first-party” and “third-party” insurance. These terms may appear in your insurance policy contract. An insurance policy is a contract between you, the insured, and an insurance company, the insurer.
When an insured, the first party, receives payment from an insurer, the second party, when an accident loss, accident or injury is caused—either by the policy owner or a third party—this is first-party insurance in action.
Depending on the location of your property, you might be required to select specialty insurance coverage in the event of a natural disaster. For instance, a lender might require the property owner in a flood zone to carry flood insurance. A property owner on an active fault line may select earthquake insurance.
Let’s review some of the FAQs of first-party insurance: