Third Party Claims: How Do They Work?
When you sign up for auto insurance, you sign a contract called a policy. This policy includes all the information you should know about your insurance, including the types of coverage included (such as comprehensive, liability only, etc.) It also includes a list of exclusions that are _not _covered by your insurance policy. (Common exclusions include the use of the vehicle for ride-sharing services like Lyft or Uber, intentionally reckless driving, and others, depending on your insurance.)
Your policy also outlines the criteria you must meet to keep the terms of your coverage valid. Obviously, paying your premium in a timely manner is one of the criteria, but there are likely others, as well.
If all of the rules outlined in your policy are met and an incident occurs, then a claim may be filed against your insurance for damages as a result of that incident. Sometimes, this claim is called a first party insurance claim. However, in some situations, a third party insurance claim is filed instead.
What is a first party insurance claim?
First party insurance claims are what primarily comes to mind when you think of filing an insurance claim. (However, they aren't actually the most common types of insurance claims.) These are claims between the owner of the insurance policy and the insurance company itself.
For example, if you are in a single vehicle accident (meaning no other vehicles were involved), and your vehicle is damaged, you would file a first party insurance claim with your insurance company. If the loss is covered by insurance policy, then you would either receive a check for damages or the insurance company would pay a repair shop directly to fix your car.
Another example would be an accident involving another vehicle if the other person didn't have auto insurance (or didn't have enough auto insurance to cover your damages). In this case, you would file a first party insurance claim against the uninsured/underinsured motorist portion of your policy.
What is a third party insurance claim?
By contrast, a third party insurance claim involves someone other than the policyholder. This is the most common type of insurance claim in the United States. In this situation, a third party is someone who receives some sort of damage due to your actions.
For example, if you're involved in an accident and are found at fault for the accident, then the other driver could file a third party insurance claim with your insurance company.
As another example, if you are walking across the street and are hit by a vehicle, you could file a third party insurance claim against that driver's insurance.
You might also file a third party claim if you are a passenger in a car that is involved in an accident. If more than one vehicle was involved, you could file a claim with the insurance companies of both drivers. The results of your claims would depend on who was deemed at fault.
How to Submit a Third Party Insurance Claim
If you need to file a third party insurance claim, there are a few steps you should take to make sure the process goes as smoothly as possible.
First, remember to gather evidence at the scene of the accident. This may be difficult if you are injured, but if possible, you should take photos and make notes of any important information while you're still on the scene. You should be as thorough as possible at this point. Also remember to get the other person's insurance information.
Once you've been treated for any medical injuries, file a claim with the other person's insurance company as quickly as possible. Most experts recommend filing within 24 hours of the event.
Most insurance companies will conduct an investigation once a claim is filed. It's best if you remain compliant with this investigation, providing evidence that backs your claim when necessary.
If you believe you need legal counsel, it may be time to hire an attorney. Many people choose to hire an attorney when significant damage is involved or if the investigation cannot determine who is at fault.
Provide evidence of any expenses you incur. The process may differ from one company to the next, so follow the steps outlined by the insurance company.
If the investigation results in your favor, you will receive compensation from the insurance company.
Filing a third party claim often isn't as tricky or complicated as you might expect. If someone files a claim against your insurance, you might expect your insurance premium to increase. Other times, however, the company will allow one claim without penalty.
If you're filing a third party claim against another person's insurance, the process is fairly simple as long as you complete the steps required by the company.
Insurance is meant to provide financial protection for all parties involved in a damaging event. If you need to file a third party claim, it's best to file promptly and provide evidence as needed. Otherwise, the investigation and subsequent compensation may be delayed.