In most insurance claims, there are three parties involved. The first party is you, the insured. The second party is the insurance company. The third party is anyone else participating in the claim. The third party could have suffered from property damage or has a personal injury because of something that the insured did or is accused of doing.
A good rule of thumb is that if the individual complaining of damages or an injury is not insured directly, then they are considered a third party. The first party has a contract with the insurance company.
First Party Insurance Claims in Florida
Florida is one of just a few states that has no-fault insurance. Having no-fault insurance means that you file a claim with your own insurance company to seek damages for medical bills or property damage first. As the name implies, no-fault insurance generally will not consider who is or could be at fault.
In situations where you are seeking damages against your own insurance company, you are the first party. If you took your claim a step further and requested damages against a potentially at-fault party and the at-fault party has insurance coverage for the claim, then you would be considered a third party.
Third Party/First Party Insurance Example
In the property insurance realm, the classic example is the condominium unit owner, who experiences damage a s a result of the condominium’s association’s negligence (i.e. water damage resulting from the condominium or homeowner association’s failure to maintain a common element such as the roof). In this instance, the interior damage may be covered by your (the first party) insurance. However, the underlying cause of the damage may be the condominium association’s negligence in failing to maintain the roof. Here, you have a potential claim for negligence against the condominium association which, in turn, should be covered by the association’s liability policy. This is considered a third-party claim, since you are making a claim against the condominium association, whose liability policy may cover the loss.
Consider another example. Imagine that you are involved in a serious car accident. You have suffered a head, neck, and back injury that will require surgery. When you report this accident to your own insurance company, you are considered the first party. The insurance company is still the second party.
Your medical costs end up exceeding the limits of your personal injury protection coverage, so you decide to assert a claim against the other party who was at fault. When you bring this type of claim, you will also likely involve the other person’s insurance company. In that situation, you are considered the third party as to the other person’s insurance company, but you are still the first party when it comes to your own insurance contract.
Why Does First Party/Third Party Matter?
The difference between third party and first party claims is important for bad faith claims against an insurance company. The law in Florida is slightly different depending on your connection to the insurance company.
First party bad faith claims are expressly set out in a statute. Insureds can assert claims against their own insurance company. This usually occurs when the insurance company is being dishonest or is generally not acting in their insured’s best interests. There are additional grounds for bad faith claim as well.
Third party bad faith claims are allowed under a statute and through case law. However, the third party must choose which law they want to use. This can be a confusing process, so it is important to have a skilled insurance attorney to help.
If you feel like your insurance company or someone else’s insurance company is not being fair or taking advantage of you, you have legal options. Contact JP Salas Law for a free case consultation by filling out our contact form or calling 954-315-1155.