Understanding First Party vs Third Party Coverage

Understanding the difference between first-party vs third-party insurance can make or break your claim. These aren’t just abstract terms buried in fine print; they determine who you file a claim with, how you recover losses, and whether you’re left fighting your own insurer or someone else’s. At Daly & Black, P.C., we’re here to make sure you understand your rights and know when to fight back.

What Is First Party Insurance?

First-party insurance refers to coverage you purchase to protect yourself and your property. It’s a direct contract between you, the policyholder, and your insurance company. When you suffer a loss, you file a claim with your insurer.

First-party insurance definition:

A type of insurance where the policyholder receives compensation directly from their own insurance company for a covered loss.

Examples of first-party claims include:

• Hail or wind damage to your home
• Fire or water damage to your commercial property
• Theft or vandalism
• Business interruption due to a covered event
• Personal Injury Protection (PIP) under auto insurance

These claims often become contentious when insurers deny, delay, or underpay. That’s when you need an experienced first-party insurance attorney who knows how to hold carriers accountable.

What Is Third-Party Insurance?

Third-party insurance provides protection if you cause damage or injury to someone else. In this scenario, the “third party” (the person who suffered damages) makes a claim against your policy. Alternatively, if you are the one who suffered damages, you may have the right to bring a third-party claim against the at-fault party’s insurer to recover damages.

Third-party insurance definition:

Insurance that pays out to someone else, not the policyholder, when the policyholder is legally responsible for a loss.

Common examples include:

• Auto liability coverage when you’re at fault in a crash.
• General liability coverage for businesses.
• Homeowner’s liability for accidents on your property.

Successfully resolving a third-party insurance claim requires establishing who was at fault and demonstrating how the other party’s negligence led to the loss. 

This often involves gathering evidence, securing witness statements, and negotiating with the insurance company or pursuing litigation if a fair resolution cannot be reached. The attorneys at Daly & Black are equipped to handle every step of that process. 

The Difference Between First Party and Third Party Insurance

Understanding the difference between first-party and third-party insurance is critical because it affects everything from how claims are processed to your rights under the policy.

Feature	First Party Insurance	Third Party Insurance
Who is covered?	You, the policyholder	Someone injured by your actions
Who files the claim?	You	The injured party (against your insurer)
Who receives compensation?	You	The third party
Common disputes	Delay, denial, underpayment	Liability disputes, negligence claims

Still unsure which applies to your situation? That’s where we come in. The insurance lawyers at Daly & Black can advise you on exactly where you stand and how to move forward.

Why This Difference Matters in a Dispute

Insurance companies handle first-party and third-party claims very differently. And unfortunately, first-party claimants often face some of the worst tactics in the business. 

When you’re fighting your own insurer, it’s a first-party dispute, and you need a legal team that knows how to push back.

Recognizing Bad Faith Insurance Practices

Insurance companies have a legal duty to act in good faith when handling your claim. When they don’t, you may have the right to bring a bad-faith insurance claim. This happens when an insurer places its own financial interests ahead of yours, delays or denies coverage without justification, or fails to properly investigate or explain its decisions.

Under the Texas Insurance Code and the Louisiana Insurance Code, insurers are bound by law to treat policyholders fairly. Violations of these duties may entitle you to compensation beyond your original claim, depending on the jurisdiction where your policy is issued.

Common examples of bad faith include:

• Unreasonable delays in payment
• Denial of claims without proper explanation
• Failing to investigate the claim thoroughly
• Refusing to pay when liability is reasonably clear
• Offering less than what is owed under the policy
• Misrepresenting policy terms or conditions
• Requesting unnecessary or excessive documentation
• Accusing the insured of wrongdoing without cause

Bad faith can occur in property, auto, health, life, or business insurance claims. If your insurer is making you jump through hoops, ignoring your evidence, or dragging out the process, it’s time to get a lawyer involved.

At Daly & Black, we’ve taken on the biggest names in the insurance industry. Whether it’s a home damaged by a hurricane, a business forced to close from storm loss, or fire damage that insurers want to blame on “pre-existing issues,” we’re prepared to go to war for what you’re owed.

How Comparative Fault Affects Insurance Claims in Texas and Louisiana

Whether you’re filing a third-party claim against someone else’s insurance or pursuing a first-party claim under your own policy, your compensation may be impacted by your own actions. Both Texas and Louisiana follow comparative fault rules, but they apply them differently:

Texas: Modified Comparative Fault (51% Rule)

Under Texas law, you can recover damages in a third-party claim as long as you are not more than 50% at fault for the accident. Your compensation will be reduced in proportion to your percentage of fault. For example, if you are found 30% at fault, your recovery is reduced by 30%.

Louisiana: Pure Comparative Fault

Louisiana uses a pure comparative fault system. This means that even if you are 99% at fault, you can still recover 1% of your damages. However, your award will be reduced by your share of fault.

In either state, insurance companies may try to shift blame onto you to limit their payout, even in first-party disputes. That’s why having legal counsel is critical, to challenge unfair fault assignments and fight for your full compensation.

FAQs

What is first-party insurance coverage?

First-party insurance covers your own losses. You file a claim with your insurer for damage to your property, loss of income, or personal injury under your own policy.

What is third-party insurance coverage?

This type of coverage kicks in when someone else sues you or claims you caused them harm. Your insurer pays the claim or defends the case.

Why is it important to understand the difference?

Because it impacts your legal rights and the path to compensation. If you’re dealing with a denied first-party claim, Daly & Black may be able to help you fight back and recover what’s rightfully yours.

Ready to Take on the Insurance Company? We Are.

You don’t have to accept a denied or underpaid claim. Daly & Black is ALL IN. ALL THE TIME, for policyholders who are getting pushed around by their insurers. We work on a contingency fee basis, which means you don’t pay unless we win for you.Contact us today to schedule your free consultation