Third Party Claim Vs. First Party Claim

A question typically asked of Fort Worth Insurance Lawyers is, – What is the difference between a third party claim and a first party claim.

A “first party” claim is usually a policy that  typically involves insurance that provides policy benefits directly to the insured or beneficiary in the event of a loss.  The Texas Insurance Code, section 541.051(2) defines “first party claim” as a claim “by an insured or a policyholder under an insurance policy or contract or a beneficiary named in the policy or contract that must be paid by the insurance company 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.  These examples are found in the 1997, Texas Supreme Court opinion styled, Universe Life Insurance Company v. Giles, wherein the court is describing differences between first party and third party insurance.

In contrast, “third party coverage” is generally considered to include 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.  This is also discussed in the Giles opinion wherein the court is describing differences between first party and third party insurance.