What Does First Party Insurance Mean?
First party insurance is insurance that protects the policyholder or their property. It differs from third party insurance, which covers losses incurred by someone other than the policyholder, whether they are in a car crash involving the policyholder or are the recipients of coverage provided by an employer.
Insuranceopedia Explains First Party Insurance
Many insurance policies will cover third parties. The bodily injury and property damage coverage on an auto insurance policy, for instance, will cover harm caused to another driver or damage to another's property.
With first party insurance, on the other hand, the policyholder is the named insured, meaning that the person purchasing the policy is also the one covered under it. If the insured suffers a loss, they file a claim against their insurer to acquire the compensation they are owed under their policy. Since the contract is between the insured and the insurance company only, it stipulates certain fiduciary duties and obligations that the insurer owes to the insured, such as the duty to act in good faith.