First-Party versus Third-Party Insurance Claims

Laws | March 26, 2021

After a personal injury accident, there are several steps you can take to recover damages for your injuries. In certain cases, such as car accidents and injuries on someone else’s property, you could file an insurance claim to secure compensation for medical expenses, lost wages, pain and suffering, and more.

However, there may be more than one insurance company that you can file a claim against. In Texas, there are two types of insurance claims you could file: a first-party claim or a third-party claim. While you file a third-party claim against another person’s insurance company, a first-party claim involves your own policy.

First-Party versus Third-Party Insurance Claims

What Is a Third-Party Insurance Claim?

In Texas, many people carry insurance policies. Since Texas is a fault-based car insurance state, all drivers must carry liability insurance in the following minimum amounts.

  • $30,000 for bodily injury liability per person per accident
  • $60,000 for total bodily injury liability per accident
  • $25,000 for property damage per accident

While Texas law does not require residents to purchase homeowners insurance, many property owners hold these policies to protect their finances in case of an accident, natural disaster, or other adverse event. Business owners also hold insurance policies for their office buildings, retail locations, and other properties.

After an accident involving a driver or property owner, you can file an insurance claim against his or her policy. The insurance company will investigate your claim and determine whether to offer compensation. Instead of the at-fault party paying for your damages out of pocket, the insurance company pays your settlement.

First-Party Insurance Claims in Texas

If you have the appropriate coverage, you may also file a first-party insurance claim after an accident. Texas does not require drivers or property owners to hold first-party insurance coverage, but these policies can be very useful after certain accidents. For example, if you are in an accident with an uninsured driver, he or she will not have an insurance policy you could file a claim against. Instead, you can file a claim under your uninsured/underinsured (UM/UIM) insurance policy and recover compensation for damages such as medical expenses or lost wages.

There are many types of first-party insurance coverage, including the following.

  • Medical payments (Med Pay) coverage, which pays for your medical bills following an accident
  • Personal injury protection (PIP) coverage, which pays for multiple types of damages after a car accident, such as lost wages, medical treatment, and essential services
  • Collision coverage, which pays for vehicle repairs or replacement after an accident
  • Comprehensive coverage, which pays for vehicle repairs or replacement after theft or damage due to vandalism, natural disasters, or other causes outside of a collision

In Texas, first-party insurance coverage is optional. Purchasing these policies could protect your finances in the event of an accident. However, there are certain situations where filing a third-party claim or lawsuit may be in your best interest. To determine your optimal path to compensation, speak to a Houston personal injury lawyer as soon as possible.

What to Do If You Suspect Insurance Bad Faith

Although first and third-party insurance claims provide compensation in the event of an accident, not all insurance representatives have your best interests in mind. In some cases, a representative may commit an act of bad faith, or unfair treatment of a policyholder. For example, a representative may fail to promptly investigate a claim or deny a valid claim without proper reason.

In these situations, it is important to speak to an insurance claims lawyer as soon as possible. Your attorney can identify whether bad faith is occurring and can take steps to hold the company accountable for its decisions. Contact a lawyer as soon as possible to discuss your legal options.