What is the difference between first party and third party insurance policies?

6."First party" insurance policies provide coverage for loss or damage sustained by the insured, while "third party" insurance provides coverage for liability of the insured to another. First party lawsuits, as in this case, involve an insured's claims against the insurer under coverages written for the insured's direct benefit; a claim for breach of the implied covenant of good faith and fair dealing generally involves the insurer's refusal, without proper cause, to compensate the insured for a loss covered by the policy, or unreasonable delay in payments due under the policy. Third party lawsuits generally involve claims that the liability insurer mishandled a third party claim against the insured, such as by unreasonably refusing to settle within policy limits or to provide a defense. (Waters v. United Services Automobile Assn. (1996) 41 Cal.App.4th 1063, 1069-1070.)

6."First party" insurance policies provide coverage for loss or damage sustained by the insured, while "third party" insurance provides coverage for liability of the insured to another. First party lawsuits, as in this case, involve an insured's claims against the insurer under coverages written for the insured's direct benefit; a claim for breach of the implied covenant of good faith and fair dealing generally involves the insurer's refusal, without proper cause, to compensate the insured for a loss covered by the policy, or unreasonable delay in payments due under the policy. Third party lawsuits generally involve claims that the liability insurer mishandled a third party claim against the insured, such as by unreasonably refusing to settle within policy limits or to provide a defense. (Waters v. United Services Automobile Assn. (1996) 41 Cal.App.4th 1063, 1069-1070.)