In _______________, the insurance company defends the policyholder for claims made by others.

Question

Options

• Afirst-party claim
• Bsecond-party claim
• Cthird-party claim
• Dfourth-party claim

• A
  16% (7)
• B
  7% (3)
• C
  72% (31)
• D
  5% (2)

Explanation

In a third-party claim, the insurance company steps in to defend its policyholder against claims brought by an outside party - someone who is not part of the original insurance contract. For example, if you cause a car accident and the other driver sues you, your liability insurer defends you against that third party's claim.

Why the distractors are wrong:

• A (first-party claim): This is when you file a claim against your own policy (e.g., your car is stolen and you claim from your own insurer) - no defense of you against others is involved.
• B (second-party claim): This term has no standard meaning in insurance law; "second party" typically just refers to the insurer itself in the contract.
• D (fourth-party claim): This is not a recognized insurance category at all.

Memory tip: Think of the three parties in order - first is you (the insured), second is your insurer, and third is the stranger who wasn't part of your policy. When that stranger comes after you, your insurer defends you - that's a third-party claim.

No community discussion yet for this question.