If you get hurt in a car accident, you may have to file a personal injury insurance claim against your own coverage, rather than against the other driver. A claim against your own insurance is referred to as a first-party claim. A claim against the other (at-fault) driver is referred to as a third-party claim.
If you live in a no-fault state or Puerto Rico, you don’t have a choice. You must file a claim with your own insurance company.
Three Reasons for Filing a First-party Claim
- The at-fault driver was either underinsured or uninsured, and you have UIM coverage.
- You have personal injury protection (PIP) coverage, and don’t have time to wait for the at-fault driver’s insurance company to start paying your bills.
- You live in a no-fault insurance state or Puerto Rico, and are required by law to do so.
Pros and Cons of First-party Claims
- You don’t have to worry about whether you or the other driver was at fault. Your insurance company pays your claim regardless of who caused the accident.
- Your current medical bills are paid, without having to negotiate the amount or argue responsibility with a claims adjuster.
- You’re compensated for future medical bills (related to the accident).
- Your out-of-pocket expenses are reimbursed (e.g. medications, crutches, etc.)
- You receive your benefits promptly, compared to a third-party claim which might take months (even years!) before settlement and payment.
- You have less stress, because a first-party claim is not an adversarial process.
- You may have to meet your deductible before your insurance company will start paying your medical bills and expenses.
- Depending upon the state where you live, the maximum insurance benefits may not be very high. Many states set the maximum medical coverage under no-fault or PIP at about 80 percent of the total, and the maximum for lost wages at only 60 percent.
- You may have to surrender your future rights to sue the at-fault driver to your insurance company (also known as waiving your right to subrogate).
- You may have to reimburse your insurance company if you receive any compensation from the at-fault driver or his insurance company.
- You also may have to reimburse your insurance company if you receive payments from your private medical health plan.
In first-party personal injury claims, you can’t get compensation for the pain and suffering or emotional distress you endured as a result of the accident. You’re also prohibited from claiming punitive damages for intentional misconduct.
Filing a First-party Claim
Filing a first-party claim is very similar to filing a third-party claim. The same actions apply, from the moment of the accident up to contacting the insurance company:
- Stop immediately after the accident. In most states, failing to stop at the scene is a felony punishable by time in prison.
- Call 911 for police and emergency medical assistance.
- Collect information. If you can, write down the other driver’s contact and insurance information, and the contact info of any passengers and witnesses.
- Don’t get into arguments about who was at fault. That will be determined later, when your insurance company investigates the accident.
- Take photographs. Use a camera or your cell phone to take photos of the scene, any vehicle damage, and any visible injuries.
- Ask the officer at the scene for the police report service number.
- Contact your auto insurance company and file your injury claim.
Claim Notification and Release of Information
Your personal auto policy requires you to notify your insurance company after an accident. When you do, ask them to send you a follow-up letter confirming you’ve complied with the notification terms of your policy. Make sure they include the claim number for future reference.
Your insurance company will require you to give a statement about the accident. They will also ask you to sign releases of information so they can collect and review your medical records. If you are claiming lost wages, they’ll want to access your employment records as well. You must cooperate to keep your claim moving.
Unlike a third-party claim, which can be adversarial, a first-party claim is designed to promote mutual cooperation between the insured and the insurer. That spirit of cooperation dictates you do what you can to help your insurance company resolve your claim.
Bad Faith Actions
Your insurance company has a legal duty to act in good faith. This means if you file a claim, and your insurance company gives you the run-around, or refuses to cooperate in what you believe to be a valid claim, they may be acting in bad faith.
If you think your insurance company is acting in bad faith, contact a personal injury attorney immediately. This circumstance requires an attorney’s legal expertise.
In a customary first-party claim, punitive damages are not covered. This doesn’t apply if you file a bad faith lawsuit against your insurance company. If you win, the court can not only force your insurance company to pay your rightful claim, it can also award a further amount as a penalty against the company for its bad behavior.
Arbitration and Mediation
If a first-party insurance claim can’t be settled, the next step does not have to be a lawsuit. Between a failed settlement negotiation and a lawsuit, your case can go to arbitration or mediation.
Arbitration and mediation, collectively known as alternative dispute resolution, or ADR, are other methods of settling your claim. If you and your insurance company are at a stalemate, you can ask them to participate in arbitration or mediation. In fact, many insurance contracts now include language requiring you to agree to arbitration in lieu of filing a lawsuit.
- Arbitration is normally binding, and the decision of the arbiter can’t be appealed. You and your insurance company will be bound by the ruling.
- Mediation is normally not binding. The mediator’s purpose is to bring both sides together and get them to agree on a settlement amount. If mediation fails, a lawsuit can still be filed.
Insurance companies do not want to get involved in lawsuits with their insured. When faced with the possibility of a lawsuit, they’ll likely agree to an alternate form of dispute resolution. If you and your insurance company agree to ADR, you can probably represent yourself.
Additional Medical Insurance
Before purchasing an auto insurance policy, read every page carefully. Be especially aware of the language on the Declaration Page. Note if the amounts of No-fault and PIP benefits are limited, and by how much.
To ensure that you have enough coverage for an injury accident, you should decide if you need to purchase gap insurance or additional private medical insurance to cover those extra costs.
Learn more about first-party claims here.
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