First party vs. third party claims
We asked Dave Wattel, an Arizona attorney who has been handling plaintiffs' cases exclusively for over 20 years, to explain the difference between first and third party claims and how insurance companies adjust claims according to those relationships. Here's what he told us:
If it’s a first-party claim, that is you’re dealing with your own carrier, they have to adjust [claims] within a reasonable period of time – the definition of which is always open for discussion. With a third-party carrier or third-party claim, you've got to understand that that carrier owes nothing to the claimant. The defendant that causes the accident, allegedly, is not responsible for paying the claimant or the victim anything until a judge and jury renders a decision and a judgment has been obtained.
Obligations to pay & defend
The insurance company that insures the defendant has two obligations and two obligations only, according to Wattel, “One, its obligation to pay. Two, its obligation to defend. However, both of those are the insurance company’s choice. So when they make a low ball offer, or no offer, to a victim or claimant, they’re essentially saying, 'We don’t think much of your claim and we’re confident that we’re willing to elect our duty to defend obligation under the terms of the policy.'
“Or they may just say, 'Hey listen. We’re choosing to defend this claim along with other claims because that’s our business model at present and we think that it will save us money in the long run.' They think that if they get tough and force the plaintiff’s bar to litigate that some plaintiff’s lawyers might not take those cases and may settle them short of full value.”
Wattel says that you've got to understand that in a third-party setting, even though the person stopped at a red light and got slammed from behind, the insurance company that insures the defendant who causes the accident has no obligation to offer anything because the obligation is to the insured, not to the victim of the accident.
If you've been injured in an auto accident or want to know more about what obligations your insurance company owes you, contact an experienced auto accident attorney for a free consultation.