First Party Insurance Claims

Someone in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, De Soto, Aledo, Weatherford, Azle, Burleson, or anywhere else in Texas may ask, What is a “First Party” Insurance Claim?
“First party” insurance claims are claims that an insured makes against their own insurance policy. Most of the time a person making a claim against someone else’s insurance policy is considered a “third party” claimant. However, sometimes a person making a claim against someone else’s policy is still considered a “first party” claimant when the person making the claim is a beneficiary of the insurance policy.
A “first party” policy typically involves insurance that provides policy benefits directly to the insured or beneficiary in the event of a loss. This is further set out in the Texas Insurance Code, Section 542.051(2). In that section, “first party claim” is defined as a claim “by an insured or a policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract that must be paid by the insurer directly to the insured or beneficiary.” These types of policies generally include health insurance, life insurance, disability insurance, workers’ compensation insurance, auto property insurance, homeowner’s property insurance, and commercial property insurance. The Texas Supreme Court, in 1997, described the difference between first party and third party insurance in the case styled, Universal Life Insurance Company v. Giles.
“Third party coverage” is generally considered to include all forms of liability insurance. This type of insurance is designed to insure against a loss to third parties caused by the insured or another covered person for whom the covered person may be legally responsible. These types of policies include commercial general liability, auto liability, homeowner’s liability, professional liability, and directors and officers liability policies.
Consultation with an experienced Insurance Law Attorney will help understand the difference between first party and third party insurance.
Another source of research in understanding the differences may be gleamed by searching the Texas Department of Insurance web site.
There are great differences between the ways a first party claim is legally pursued and the ways a third party claim is pursued. Almost all third party claims are going to be “tort” actions, whereas first party claims can be “breach of contract”, violations of the Texas Insuance Code, and violations of the Texas Deceptive Trade Practices Act.
Here are some examples of “first party” policies:
Auto Property Coverage. The standard Texas Auto Policy covers accidental loss or damage to the covered auto. If an insured is involved in a single-car accident resulting in property damage to the insured vehicle, the insured possessing this type of coverage may submit a claim directly to their insurance company and receive compensation for the damage in accordance with the terms of the policy.
Health Insurance. Health insurance refers to coverage for medical and hospital expenses and may be issued on an individual or group basis. An insured who requires health care may submit a claim directly to their insurance company for the costs of the health care received.
Life Insurance. Life insurance includes insurance on the life of the insured as well as annuities. Following the insured’s death, the life insurer pays death benefits in accordance with the policy to the designated beneficiary.
Disability Insurance. The insurance industry uses the term “disability insurance” to refer to insurance against loss of income to an insured by reason of disability caused by accident or sickness. Disability insurance may be noncancellable or guaranteed renewable. Disability benefits under some policies may be reduced by social security or unemployment benefits.
The above are just a few examples of first party insurance policies, there are many others.