By definition, a first-party claim is one that you make against your own insurance carrier. It differs from a third-party claim where you make a claim against another party in the event of an accident or loss. Making a first-party claim requires that you have the type of policy that would cover such a claim. To illustrate, imagine you're driving through an intersection just as the traffic light is turning red. As you cruise through the intersection, you collide with another car making a left turn. After the collision, you and the other driver inspect the damages. Because you drive a late model car, you carry collision and comprehensive coverage as a safety measure against all types of car insurance claims. You have the option of submitting your claim for property damage to your own insurance carrier as a first-party claim. You also have the option of filing a claim against the insurance carrier of the other driver as a third-party claim since a car making a left turn is supposed to yield to oncoming traffic.
How will one course of action differ from the other? In making a first-party claim, you will receive a check for the repair costs to your vehicle. This check will be offset by the amount of your deductible. The deductible is the money you must pay out of pocket before your insurance makes good on its obligation to reimburse. If you go against the other driver in a third-party claim, things will work a little differently. You tell yourself it isn't right for your insurance carrier to handle this because it could lead to higher premiums for you. But, you must realize that in a third-party claim, the respective faults of the parties will become an issue.
The other driver was making a left turn, which is not being disputed. However, you were cruising through what you claim was a yellow light. The other driver claims the light was red for you and that he had the turn signal in his favor. This business of liability will need to be hashed out. Let's say it's established that you're deemed 25 percent at fault and the other driver, 75 percent. This means that in your third-party claim, your recovery will be offset by the extent to which you were at fault. If the damage to your rear fender was $2,000, you would receive a check for $1,500 in a third party claim, as opposed to $2,000 in a first party claim (provided you had no deductible in your own policy).
Therefore, it's important to understand what you stand to lose in pursuing a third-party claim as opposed to a first-party claim.