Insurance 101 – First Party Claims Versus Third Party Claims
There are several insurance coverages that may come into play in your case: Depending on the facts of your case, you may be making claims under your own insurance policy, making claims against another driver who is covered by insurance, or both. Claims that you make against your own policy are generally referred to as “first party” claims. First party claims include situations where you are an “insured” under the terms of policy and a premium was paid for the benefit. These claims can be contrasted with “third party” claims. Third party claims are where you are making a claim against someone for their negligence, and that person has an insurance policy that provides indemnification and payment for their liability. You are not insured under the other person’s policy, so it is a third party claim.
Insurance companies on first party claims owe you a duty of good faith and fair dealing. This means that they must investigate the claim before refusing to pay and must make reasonable efforts to resolve claims based on the facts of their investigation. Also, the Insurance Fair Conduct Act may create additional legal relief if your own insurance company violates the Washington State Insurance Commissioner’s rules and regulations for handling claims.
When handling third party claims, insurance companies owe no duty of good faith or fair dealing to you. They only owe a duty to their insured — not to you. Thus, they can take any position they want that is consistent with their duties to their own insured. On liability claims, this means that they can tell you that they will pay little or nothing to settle your claims, even if there is clear evidence of liability and damages.
