Difference Between A First-Party and Third Party Claim

I'll Be Right There

Request Free Consultation

What Is the Difference Between A First-Party and Third Party Claim?

If you have been involved in a Michigan car wreck, then you may have heard such terms as “first-party” claim or “third party” claim. These phrases can be confusing. This article provides a basic explanation of what these claims are and what they mean.

A first-party claim is made by a person against an insurance carrier for Michigan no-fault benefits. If you are a policyholder, then you make the claim against your own insurance company. These claims are contractual, meaning they arise out of the contract – insurance policy – between the policyholder and the insurance company.

Because Michigan is a no-fault state, an individual can make a first-party claim even if they caused the car wreck.

First party claims usually involve the payment by the insurance company of medical expenses, wage loss benefits, replacement services and other benefits. Under Michigan law, there is no time or dollar limit for medical expenses. This means the applicable insurance company responsible for paying first-party benefits must pay all medical expenses for life so long as the treatment is related to the car accident.

An important thing to know if that the first-party insurance company is not responsible for paying pain and suffering. This type of compensation is paid through a third-party claim.

A third-party claim is made by an injured person against the at-fault driver for causing the accident. Usually the at-fault driver is defended by a representative from his insurance company. Unlike a first-party claim, which is contractual, a third-party claim is based on tort and is a standard negligence case.

Under Michigan law, a person can only bring a third-party claim if the other driver is at least 50% at-fault for causing the accident. This is called liability.

Besides claiming compensation for pain and suffering, an individual may claim excess wage loss (wage loss that is above the statutory maximum or extends beyond 3 years) in a third-party claim.

Very often, an individual injured in a car accident may be able to make both a first-party and third-party claim for compensation. These claims can be bundled together in one lawsuit, thereby saving time and litigation costs.

Car Accident Pain and Suffering or Third-Party Claims

In a Michigan car accident negligence claim, the plaintiff may sue for pain and suffering damages as long as he or she meets the statutory threshold of death, permanent serious disfigurement, or serious impairment of body function.

The most common and litigated threshold requirement is the serious impairment of body function.

This term has undergone numerous legal changes over the years, but essentially the phrase means that a plaintiff must show an objectively manifested impairment of an important body function that affects the plaintiff’s ability to lead his or her normal life. An objective manifested impairment requires the plaintiff to show medical proof there is a physical basis for subjective complaints of pain and suffering.

If a plaintiff can show an objective manifested impairment, he or she must also demonstrate that the impairment has affected their ability to lead a normal life. Courts look to the nature and extent of the injury, the type and length of the treatment needed by the plaintiff, the duration of the injury as well as the prognosis for eventual recovery by the plaintiff.

It can be difficult to obtain pain and suffering damages for certain injuries, including so-called soft-tissue injuries.  Discovering if your injury, or the injury of a friend or loved one, meets the threshold of serious impairment of body function requires the experience and expertise of a seasoned attorney.

In addition to pain and suffering, negligent defendants are responsible to accident victims for excess economic loss, regardless of whether or not the accident victim meets the statutory threshold.

Thus, even if a plaintiff does not have a serious impairment of a body function, he or she can still recover loss wages and replacement service expenses that exceed the statutory maximum amount available in a first-party no fault claim, or lost wages and replacement services that go beyond the 3 years paid by the first-party no-fault insurance company.

Often, negligent drivers will not have adequate insurance to cover the damages they cause or, regrettably, will lack any insurance at all. Thus, all drivers should purchase and carry both uninsured and underinsured motorist coverage. Although they are not required by the state of Michigan, every driver should have these two basic coverages.

Uninsured and underinsured motorist coverage is relatively inexpensive but are extremely important. At the Lee Steinberg Law Firm, P.C., we suggest you contact your insurance agent or insurance company and purchase the highest amount of both uninsured and underinsured motorist coverage possible.

If you or a loved one has been involved in a car, truck or motorcycle accident, it is vitally important you collect and retain as much information about the accident as possible.

Make sure a police report detailing the events of the accident is completed. Get the names, addresses or phone numbers of any witnesses to the accident if possible. Most importantly, if you are hurt, seek medical attention immediately.

If you have any questions about first-party or third-party claims, please call us at 1-800-LEE-FREE (1-800-533-3733). Our experienced and dedicated team of Michigan trial lawyers is waiting to answer your questions.