First-Party Claim
What Is a First-Party Claim?
A first-party claim is a claim you file with your insurance company, asking them to pay you for a loss. You are considered the first party when dealing with your insurance policy; all others, such as customers, clients, and landlords, are third parties.
How Do First-Party Insurance Claims Work?
First-party claims are initiated by you, the named insured. If the claim is covered and your policy has a deductible, you will pay that amount out of pocket before your insurance pays.
The payout also goes to you or your business, as opposed to a third-party claim, where any payout would go to that person or organization.
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| Type of Claim | Who Makes the Claim? | Who Gets Paid? | Example |
|---|---|---|---|
|
First-party claim |
You (the policyholder) |
You or your business |
A massive storm damages your shop, so you file a claim under property coverage |
|
Third-party claim |
Someone outside your business |
Customer, client, landlord, or other person/organization |
A customer slips and injures themselves in your store and files a third-party injury claim against your policy |
TL;DR: First-party claims are about your own losses. Third-party claims are about other people’s losses that they say you caused.
What Are Some Examples of First-Party Insurance Claims?
There are many reasons why you might need to file a first-party claim with your insurance company, from property damage to cyberattacks. Check out some common examples of first-party claims across various insurance policies in the table below.
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| Coverage Type | What It Usually Protects | Example |
|---|---|---|
|
Your building, fixtures, and business contents (e.g., inventory) |
A fire damages your shop and inventory |
|
|
Tools & equipment coverage (inland marine) |
Mobile tools, gear, and equipment you use for work |
Your camera gear is stolen from your vehicle |
|
Lost income when a covered loss (e.g., fire, vandalism, or smoke damage) shuts you down |
A covered fire forces your café to close for several weeks |
|
|
Certain costs from hacks or data breaches |
Ransomware locks your systems, and you file a claim to cover the ransom payment |
|
|
Equipment breakdown coverage (if applicable) |
Sudden mechanical/electrical breakdown of covered equipment |
Your commercial freezer motor burns out and ruins inventory |
What Should You Do When You Have a First-Party Loss?
If you experience a first-party loss and need to file a claim, follow these steps:
- Make sure everyone is safe: If your loss involves someone getting injured, call emergency services if needed and provide First Aid
- Prevent further damage (if you can do so safely): Turn off your water supply, board up any broken windows, move undamaged items out of harm’s way, etc.
- Document the damage: Write down exactly what happened and when, take clear photos and videos, and list any damaged items (including models and serial numbers, if possible)
- Gather supporting documents: This includes receipts, invoices, bank or credit card statements, service contracts, or prior appraisals
- Notify your insurance company ASAP: Follow their steps to file a claim and wait for further instructions
- Hang on to any damaged items if you can: Don’t throw anything away until the adjustor has had a chance to inspect them unless they’re a health and safety hazard
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