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Understanding The Different Types Of Insurance

When you purchase an auto insurance plan, you may think that it covers a great deal. Insurance is required and can protect you if you get into an accident, but you're not immune to everything under your plan. There are different types of car insurance policies and provisions. For instance, there are generally two types of insurance categories: First-party insurance and and third-party liability. Each is different and has its own different specifics. Here is a quick rundown of these two types of policies:


In the world of insurance, there are two people involved. You are the first party, and the insurance company is the second. With this type of policy, you will make coverage payments directly to the insurance company. This policy will cover any damages that happen to your property or any other people that are on your policy. Some plans can be expensive if you put your family on the plans, so make sure compare auto insurance policies to see what is best for you. For instance, if your child wrecks your car and is on your policy, the insurance will cover the damages. However, there are a few situations that need to occur to get your claim approved:

  • The driver that caused the accident left the scene of the crime, similar to a hit-and-run.
  • You, the policy owner, did not cause the accident.
  • The accident was caused by outside forces, such as slick roads or ice.
  • The person who caused the accident does not have the proper funds to finance the repairs.


    Whereas first-party insurance covers an accident if anything happens to you, third-party is when you have to pay damages to someone who is not on your insurance. This is most commonly a liability claim. With third-party, there are two types of accidents that are covered by the policy: property damage and bodily injury. They are simple to understand, as property damage means you have to pay if you caused damage to another person's property and the bodily injury policy is if anyone was injured. An example would be if a car crashes into a person's house, that would be property damage. Bodily injury can mean a number of things that aren't limited to physical injuries. If someone was hurt in an accident and has lost wages or is emotionally distressed, that could count as a bodily injury claim.
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