A third party claim is also known as a third party proceeding, and this type of claim involves someone attempting to bring a third party into litigation. Perhaps providing an example of a third-party claim and contrasting a third party claim with a first party claim will help give you a fuller idea of what a third party claim is.
First-Party Claim Vs. Third-Party Claim
The terms first-party claim and third-party claim are both pieces of terminology within insurance law and personal injury law. Under insurance contracts, the insured person is considered the first party and the insurance company itself is considered the second party.
So, where does the third party enter the picture? A third party is someone foreign to the insurance policy covering the insured (first party) and the insurance company (second party).
For example, if person A is insured by Acme Insurance Company, then person A is the first party and Acme Insurance Company is the second party. To continue the example, a third party would be someone trying to engage the Acme Insurance Company in litigation.
Perhaps a more concrete example would help. If your home gets wrecked by a hurricane, then the owner of the homeowner’s insurance policy (the first party) contacts the insurance company (second party) to provide first-party coverage and help the homeowner recover financially from the property damage.
Third-Party Claims and Insurance Claims
A third party, then, is someone outside of the contract between the first party and the second party. Third-party claims are the most frequent type of car insurance claim made within the United States.
Filing a claim against another driver’s car insurance company following a car accident is a third-party claim. You are seeking to bring the other person’s insurance company (a third party from your perspective) into litigation, and this kind of litigation is normally a liability claim.
A third-party claim is sometimes necessary to take following a car accident because you may have suffered a personal injury or damage to your car, yet the other person’s insurance company doesn’t have a contract with you per se.
The insurance contract is between the person that hit you (first party) and their insurance company (second party), so you (the third party) need to bring the other person’s insurance company into litigation in order to receive compensation for possible personal injuries or pain and suffering sustained during or after the accident.
Examples of Third-Party Claims
If, say, you were driving a company car on a work-related assignment and you got into a car accident, then you might be able to receive compensation for your medical expenses by filing a third-party claim against the insurance company that your employer has.
Lost wages as well as pain and suffering could be compensated for by the other person’s insurance policy if the other person was deemed at fault in the accident. These kinds of third-party claims are often liability claims because another party is at least partially responsible for your personal injury or possible pain and suffering.
Under rare circumstances, someone could file both a first-party claim and a third-party claim against an insurance company. If, say, you were a passenger if your own car and your friend driving the vehicle got into an accident. You could, then, file a first-party claim with your own insurance company and file a third-party claim.
First-party claims are between a policy holder (first party) and an insurance company (second party) whereas a third-party claim is filed by an outsider to that insurance contract. Third-party claims are usually associated with car insurance claims and typically involve a liability claim.