What characterizes first party claims?

First party claims are characterized by being made by the insured themselves regarding losses they have suffered. When an individual or business holds an insurance policy and subsequently reports a loss related to covered risks, they are effectively initiating a first party claim against their own insurer. This process allows the insured to seek compensation for damages, such as those caused by fire, theft, or natural disasters, under the terms specified in their policy.

In contrast, third-party claims involve situations where an individual outside of the insurance policy agreement (the third party) seeks compensation from the insured’s insurance company due to alleged damages caused by the insured. Claims without liability issues typically do not reflect the nature of first party claims, as first party claims can often involve liability factors depending on the circumstances of the loss. Lastly, claims related to policy exclusions do not characterize first party claims, as exclusions pertain to specific circumstances or incidents not covered by the policy, which would not ordinarily be a focus in a first party claim scenario.