Vehicle insurance is vital for anyone who owns or drives a car. While drivers are required by law to carry certain types of insurance, it is still smart to purchase additional coverage. A single car accident could incur thousands of dollars in replacement or repair costs, not to mention medical costs.
This is why it is important to understand the types of car insurance policies; Understanding them could be the difference between recovery and financial ruin.
What is First Party Insurance vs. Third Party?
In simple terms, there are two categories for car insurance: first party insurance and third party liability. The first party is the owner of the policy. The second party is the insurer. The third party is the other person involved in the car accident or property damage claim. Basically, third party refers to any other people who are not the policy owner or their passengers and who have incurred damages due to some action on the part of the first party.
First party insurance covers the policy owner and any of his or her passengers under certain conditions.
- The policy owner was not found to be at fault in the accident
- The accident was a hit and run or other type of accident where the driver at fault cannot be located
- No one was named as being at fault for the accident
- The driver who was named as being at fault for the accident does not have suitable means for repairing the damages that the first party incurred
Types of First Party Coverage
There are several types of first party coverage. The most important are collision coverage, comprehensive coverage, uninsured/under insured motorist, and medical payments. This is what you need to know.
- Collision Coverage – This coverage ensures that in the event of an accident the policy owner’s vehicle will be replaced or repaired. It does not matter who caused the accident.
- Comprehensive Coverage – If the policy owner’s vehicle was lost or damaged due to other agents such as vandalism, floor, theft, or fire, the vehicle and the personal property that was inside will be replaced or repaired.
- Uninsured/Under Insured Motorist (UM/UIM) – This coverage pays for lost wages, pain and suffering, and other types of loss to the policy owner and passengers in the event that the driver at fault does not have insurance or does not have adequate insurance to cover the damages. It also covers hit and run accidents where the driver at fault cannot be located.
- Medical Payments – MedPay covers the policy owner’s and his or her passengers’ medical and funeral expenses. It does not matter who was at fault. Personal Injury Protection (PIP) covers lost wages and certain damages that are not covered under MedPay, regardless of who is at fault.
Experienced Nevada Insurance Attorney
As a former insurance agent, we understand this can be confusing. But we are here to help. Call us today and find out how we can help you get the compensation that you deserve.