After an accident or on-the-job injury, insurance often gets involved. Maybe it’s yours or it’s the at-fault party’s insurance company. Either way, you may hear different terms like first-party, third-party, and you have no idea which is which or how it all impacts your case.
There is a difference between a third-party claim and a first-party claim, and depending on your situation, you may be better off filing one or the other. In some cases, though, you may want to file both. And if your injury happened on the job, you may still have the right to pursue a third-party claim even when you’re collecting workers’ comp. It’s a lot to think about, especially if you’re recovering from a serious injury, but this guide breaks it all down.
First Party vs. Third Party Claims (and Why It Matters)
A first-party claim is the one you file with your insurance company to cover your losses under the policy you pay for. A third-party claim is when you file against someone else’s insurance because they are at fault for your damages or injuries.
The terms describe the agreement between you and your insurance company. You pay your insurance company for coverage, AKA your insurance policy. That’s a first-party relationship. When someone else is involved in that relationship, like the person who caused your accident, that “someone else” is the third party.
First Party Claim Examples
Any type of claim you make with your insurance company is a first-party claim. For example, if your car is stolen, you file a claim directly with your insurance company. The same is true if you park your car on the street overnight and find a damaged bumper the next morning, but no one left a note explaining what happened and there’s no video evidence to help you find the culprit.
Third Party Claim Examples
If someone else is responsible for your injuries or damages, you file a claim with their insurance company, essentially making you the third party. You can make a third-party insurance claim when:
- Someone else caused your car accident
- A dangerous or defective product injures you
- You slip and fall on someone else’s poorly maintained property
- A contractor damages your property
It’s important to note that Washington State uses a comparative negligence standard. Even if you’re partly at fault for the accident, you can still make a third-party claim. If you’re awarded compensation, your final award will be reduced by your percent of fault in the incident.
Third Party Claims in Workers’ Compensation Cases
All of the above examples are specific to personal injuries. However, in many cases you can make a third party claim even when your injury happened while you were on the job and you’re collecting workers’ compensation.
Workers’ compensation is a set of benefits you’re legally entitled to when you’re injured at work. In Washington State, your employer pays the Department of Labor and Industries (L&I) a set amount every month — like an insurance premium — to pay injured workers for their medical treatment, lost wages, and other compensation while they can’t work. When you accept workers’ compensation, you give up the right to sue your employer for additional benefits.
However, if you were injured on the job and those injuries were caused by someone other than your employer or a coworker, you may have the right to file a third-party claim against the responsible party. That’s still a personal injury case, but being injured on the job and receiving workers’ compensation doesn’t mean you don’t have the right to pursue your claim.
For example, if you were making a delivery for your employer and a negligent driver causes a car accident, you can pursue a third-party personal injury claim against the at-fault driver, even if you were driving your own car for work. What matters is you were engaged in your work duties, not what car you were driving.
Similarly, construction sites often have multiple contractors and subcontractors working on different parts of the job at the same time, and the person working next to you may not work for the same company you do. If one of these contractors or subcontractors is at fault for your accident and injuries, you may be able to pursue a claim against them.
Labor and Industries Role in Third Party Claims
When you’re injured on the job, you have to file a Report of Accident with L&I. It’s a form your doctor fills out that asks for details about your injury, diagnosis, and other medical information.
That form also gives you the option to notify L&I that you’re pursuing action against a third party. If that’s the case, L&I will send you another form (the Third Party Election Form), and you’ll have three options.
The first is notifying L&I that you’d like them to pursue the third-party claim on your behalf. If you go this route, L&I may or may not pursue action against the third party, but if they do, you don’t have to pay any upfront legal costs. And like working with a contingency-fee attorney, you won’t have to pay anything if L&I pursues the claim and loses. If they win, your fees will be deducted from the compensation L&I recovers on your behalf.
The second option is choosing to pursue a third-party claim against the at-fault party on your own. If you choose this, you must notify L&I when you file the lawsuit and keep them informed of the progress. The form also notes that if you do not “diligently pursue your legal action,” they will ask the court to assign the case to L&I. And if you pursue legal action on your own, any compensation you recover must be reported to L&I because you are required to repay your claim benefits from that award.
Finally, between the time you decided to pursue a third-party claim and received the form, you decided not to go after the third party. You can also notify L&I that you’ve changed your mind as long as you explain why.
Should You Start With a First Party Claim Before a Third Party Claim?
Depending on the type of accident, property damage, and injuries you’ve suffered, you may want to consider filing a first party claim. Here’s when it makes sense:
- Speed matters. When your claim is relatively simple, like a fender bender, filing a first-party claim makes it more likely you’ll get the repair money or reimbursement of medical expenses more quickly.
- Insurance. The at-fault party is uninsured or underinsured. In that case, you have to go directly after the at-fault party, not their insurance, and that can be a far more complex claim to pursue.
- Fault is murky. You say the other person is at fault, but they’re blaming you. In this case, assigning fault may fall to a judge, and it may take months before you receive any compensation. Filing a first-party claim will get you some of the money you need until the dispute is settled.
Keep in mind that filing a first-party claim doesn’t mean you give up your right to file a third-party claim later. You may decide that getting something from your insurance company quickly makes the most sense in the short-term because pursuing a third-party claim may take a long time.
Also note that when you file a first-party claim with your insurance, they may decide to file a subrogation claim against the at-fault party. This is not the same as filing a third-party claim. Subrogation is when the insurance company tries to recoup the money they paid you from the at-fault party. Most insurance companies will not pursue a third-party claim on your behalf, only a subrogation claim.
But there are some downsides to filing a first-party claim. Your insurance rates may go up even when the accident clearly wasn’t your fault. And if you haven’t met your deductible, the insurance company may not pay you a dime until you do. Here’s when you might want to file a third-party claim instead of a first-party one:
- You’re underinsured. Depending on the extent of your current injuries and future medical needs, your coverage limits may not provide enough compensation for your injuries. A third-party claim may help bridge that gap.
- Protecting your rates. When you have a high deductible, you may want to file a third-party claim to avoid paying it, especially if you don’t have enough cash on hand to pay it. Likewise, filing a third-party claim may keep your rates from rising.
- Fault is clear. When there’s clear and compelling evidence that someone else caused the accident or injuries (say, video proof), a third-party claim may make more sense.
Where the Fault Lies
Ultimately, when the fault doesn’t lie with you, you have the right to pursue a first-party and a third-party claim in most cases. You may want to file a first-party claim immediately, then pursue a third-party claim later.
If you’ve decided a third-party claim is right for you, Walthew Law Firm can help you navigate the complexities of this type of claim. With 90 years of experience in personal injury law and workers’ compensation claims, our vast expertise and sound legal strategies ensure you receive maximum compensation for your claim no matter where or how your injury happened.
Contact us today for a free, no-obligation consultation to review your options. There’s no fee unless we win.