First-party coverage
Definition
First-party coverage pays for losses your own business suffers, like damage to your property or lost income, rather than claims other people make against you.
How it works
In insurance, the first party is you, the policyholder. The second party is the insurer. A third party is anyone else. First-party coverage pays you for your own loss. Third-party coverage defends you and pays others when they claim your business harmed them.
Among Corgi’s policies:
- First-party: commercial property, business income and tools and equipment. They pay to repair or replace what you own, or replace income you lose, after a covered loss.
- Third-party: general liability and professional liability. They respond when someone else says you injured them, damaged their property or cost them money.
- Both: cyber insurance often includes first-party costs, like breach response and restoring your data, and third-party costs, like defending claims from people whose data was exposed.
Why the difference matters
The two kinds of claim work differently. In a first-party claim, you’re the one showing what you lost, with photos, receipts and records, and the policy pays based on how it values property, such as replacement cost or actual cash value, minus your deductible. In a third-party claim, the other person has to show your business is responsible, and the insurer typically investigates, defends you and pays covered damages up to your limit.
The guide to first-party vs. third-party coverage explains how to tell which policy a loss belongs to.