Car insurance is not something that people like to think about. However, if you have been in a car accident, insurance is often something that you cannot stop thinking about.
Understanding the difference between first-party insurance and third-party insurance is essential. It can also help you make an informed decision about what kinds of insurance to carry, which can better prepare you in the event of a crash.
What is First-Party Car Insurance?
First-party car insurance protects you if you get hurt in a car accident.
The term “first party” comes from the nature of your insurance policy. Your insurance policy is a contract between you and your insurance company. You are the “first party” to that contract. The insurance company is the “second party” to it.
An example of a first-party car insurance policy is medical payments coverage, also known as Med Pay. This is an optional coverage in Missouri that covers your medical bills in conjunction with your health insurance.
Another example is underinsured or uninsured motorist coverage. If you get hurt by someone who either has no liability insurance, or who is underinsured with policy caps that are reached before you are fully compensated for your losses, your own underinsured or uninsured motorist coverage policy steps in.
What is Third-Party Car Insurance?
Third-party car insurance protects you from lawsuits filed by people that you hit and hurt in a car accident. It pays for the losses that you caused.
It is called “third party” insurance because it protects you from people who are not included in the contract between you and your insurance company. These are “third parties” to the contract.
It is also called “liability insurance.”
Many Missouri drivers see third-party or liability insurance as a costly inconvenience. Missouri state law requires you to carry liability insurance of at least $25,000 per person and $50,000 per accident for bodily injury, and $25,000 per accident for property damage. This required coverage increased your car insurance premium and can increase further if you have a tendency to get into accidents or drive unsafely.
These drivers tend to not appreciate how liability insurance helps them. If they accidentally cause a crash, this liability insurance will cover the losses they have caused. However, it will only cover up to the policy’s limits. Once the limits are reached, the victim will have to turn to other sources of compensation. One of the options available to them is to hold the defendant personally liable for the crash. This involves putting a judgment lien on the at-fault driver’s house.
For this reason, it is generally wise to have as much third-party liability insurance as financially possible.
Car Accident Lawyers at the Smith Law Office Help Victims in St. Joseph
The personal injury and car accident lawyers at the Smith Law Office strive to legally represent victims in Kansas City, St. Joseph, Springfield, and the rest of the surrounding areas in western Missouri.
Contact them online or call their law office at (816) 875-9373.