What Is The Difference Between First-Party And Third-Party Insurance?

Car insurance is something that every driver is familiar with. At least, they should be familiar with insurance if they want to remain legal on the roadway. Throughout the Pacific Northwest and all of the United States, all drivers are required to carry a minimum amount of insurance. Each state is allowed to set the types of insurance and minimums that drivers must carry. However, insurance laws can become complex, particularly when a driver is involved in an accident. One of the most common questions that drivers have involves understanding the difference between first-party and third-party insurance claims. Understanding the difference between these two is crucial.

Who are the “parties” in an insurance policy?

It is important to understand who the parties are in a car accident claim if you want to know the difference between first- and third-party claims.

first third party insurance

Let us assume for a moment you are involved in an accident that was caused by another driver. In this case, you, as the accident victim, will be considered the “first party” concerning your personal insurance policy. Your insurance company is the “second party,” and the at-fault driver is the “third party.”

It is important to also know that these parties are not the same for everyone involved. The other driver in this theoretical scenario will identify parties differently. The other driver will be the first party for their insurance carrier, their insurance company will be the second party, and you will be the third party.

In a car accident claim, the “parties” depend on which policy you are talking about.

First-party coverage

Using the definitions above, see first-party insurance coverage refers to the compensation available to the policyholder for their injuries and other damages. So, if you file a first-party insurance claim, you are filing a claim with your own carrier. Some examples of first-party insurance coverage (dependant on state requirements) include:

  • Uninsured motorist protection
  • Underinsured motorist protection
  • Collision coverage
  • Comprehensive coverage
  • MedPay coverage
  • Personal Injury Protection (PIP coverage)
  • Rental car benefits
  • Towing coverage

Third-party coverage

If first-party claims refer to compensation paid by your personal insurance carrier, then we will see that third-party insurance is coverage that is provided to a person from the insurance carrier of the other driver involved.

Suppose you are involved in a crash caused by another driver. In that case, if you file a claim against their insurance carrier to recover compensation, you are filing a third-party claim. Examples of third-party coverages include:

  • Bodily injury liability coverage
  • Property damage liability coverage

What coverage is required in Washington and Oregon?

Every state is allowed to set the types and minimums require of drivers in their jurisdiction. Drivers in Washington are required to maintain the following types of coverage:

  • Bodily injury liability coverage: $25,000 per person – $50,000 per accident
  • Property damage liability coverage: $10,000 per accident

Drivers in Oregon are required to maintain the following types of coverage:

  • Bodily injury liability coverage: $25,000 per person – $50,000 per accident
  • Property damage liability coverage: $20,000 per accident
  • Personal injury Protection (PIP): $15,000 per person
  • Uninsured motorist protection: $25,000 per person – $50,000 per accident

As you can see, drivers in Oregon are required to carry uninsured motorist coverage. While this is not required in Washington, it is strongly recommended that all drivers obtain this coverage to help cover their expenses in the event they are struck by an uninsured motorist.