Book an appointment here

First Party

The term "First Party" in insurance refers to the policyholder or the insured individual or business. This is the person or entity who has purchased the insurance policy and is covered by it.

What is a First Party in Insurance?

In the context of insurance, the “First Party” is the insured party who buys the insurance policy. This could be an individual or a business. When you purchase an insurance policy, you become the First Party. The insurance company you buy the policy from is known as the “Second Party.” If you make a claim under your policy, the person or entity you might claim against (like in liability insurance) is the “Third Party.”

For example, let’s say you own a business and you buy an insurance policy to protect your assets. In this case, you, the business owner, are the First Party. If something covered by your policy happens, like a fire damaging your property, you would file a claim with your insurance company (the Second Party). Your insurance policy would then cover the damages according to the terms and conditions set out in the policy.

Key Components of First Party

Understanding the role of the First Party in insurance involves looking at several key components:

  1. Coverage: As the First Party, your insurance policy outlines what types of losses or damages are covered. This could include property damage, business interruption, or specific risks pertinent to your industry.

  2. Premiums: The First Party is responsible for paying premiums. Premiums are the amount you pay to the insurance company to maintain your coverage. They can be paid monthly, quarterly, or annually.

  3. Claims Process: If a covered event occurs, the First Party must follow the claims process outlined by the insurance company. This typically involves reporting the incident, providing necessary documentation, and cooperating with any investigations the insurer conducts.

How Insurance Covers First Party

Insurance coverage for the First Party works by providing financial protection against specific risks and losses outlined in the policy. Here’s how it generally works:

Risk Assessment

Before issuing a policy, the insurance company assesses the risks associated with your business. This helps determine the coverage terms and premium rates.

Policy Issuance

Once the terms are agreed upon, the insurance company issues a policy document. This document outlines the coverage details, including what risks are covered, the policy limits, and any deductibles.

Claims Process

You need to file a claim with your insurer, providing all necessary information and documentation. The insurance company will then investigate the claim to verify the details and determine the extent of the coverage.


Once the claim is approved, the insurance company will provide the payout according to the policy terms. This could be a lump sum or a series of payments, depending on the nature of the claim and the policy.

Exclusions and Limitations

While First Party coverage provides significant protection, there are exclusions and limitations to be aware of:

  1. Exclusions: These are specific conditions or circumstances that the policy does not cover. For example, standard property insurance might not cover damages caused by floods or earthquakes. These events would require separate policies or endorsements.

  2. Deductibles: This is the amount the First Party must pay out of pocket before the insurance coverage kicks in. Higher deductibles usually mean lower premiums, but they also mean more out-of-pocket costs when a claim is made.

  3. Policy Limits: This refers to the maximum amount the insurance company will pay for a covered loss. If the damage exceeds this limit, the First Party will be responsible for covering the remaining costs.

  4. Waiting Periods: Some types of insurance, like business interruption insurance, might have a waiting period before coverage begins. This means there could be a delay between the occurrence of the loss and when the insurance payout starts.

Understanding these exclusions and limitations is crucial for the First Party to ensure they have adequate protection and are not caught off guard in the event of a claim.