Los Angeles Claims Adjuster Property and Causality Practice Exam

What distinguishes a first-party claim from a third-party claim?

1. First-party claims are for personal injuries only

2. First-party claims are made against the insurance company of the insured

3. First-party claims involve direct insurance policyholders

4. Third-party claims are solely for property damage

The correct answer is: First-party claims involve direct insurance policyholders

A first-party claim is defined as a claim filed by an individual or entity directly with their own insurance company to receive compensation for losses covered under their policy. This is significant because it involves the policyholder seeking reimbursement or benefits for damages or losses they have experienced, such as damage to their property or losses from a covered event. In contrast, third-party claims involve a policyholder making a claim against another party's insurance for damages they caused. For example, if an individual is in a car accident where they were not at fault, they would file a third-party claim against the other driver's insurance. The differentiation between these types of claims is essential for understanding how insurance works and the responsibilities of both policyholders and insurers. First-party claims highlight the relationship where the insured seeks help from their own provider, whereas third-party claims reflect the dynamics of liability and external party involvement.