What are the Main Categories of Insurance Coverage in Injury and Death Cases?
Generally, insurance can be divided into first-party and third-party (or liability) coverages.
First-party insurance coverage provides protection for losses sustained directly by the policyholder, plus sometimes members of her household or passengers. Common examples are health insurance for the insured's medical bills and collision coverage for damage to the insured's own vehicle. Because these are intended to provide benefits to the person purchasing the insurance, they are considered first-party coverage.
Attorneys representing injured people on liability cases often process first-party insurance claims for no additional fee unless the insurance company contests payment.
Third-party or liability insurance, on the other hand, is to compensate not the policyholder but a third-party making a claim against the insured.
Many insurance policies contain both first- and third-party coverage. An automobile or truck insurance policy, for example, will typically include third-party liability coverage and various first-party coverages that provide benefits to the owner or occupants of the vehicle. That typically includes medical payments and uninsured motorist coverage, as well as coverage intended to compensate the owner for damage to the car, such as collision and comprehensive coverage.
Similarly, homeowners' insurance policies typically provide first-party coverage to the homeowner for damage or destruction to the home and some medical payments coverage for people injured on the property.
The homeowner’s or renter’s policy also includes liability coverage in the event that the insured or another resident of the household is alleged to have negligently injured someone else. Homeowner’s and renter’s policies typically apply to liability of the insured arising from a negligent incident not related to use of a motor vehicle. For example, this may include incidents involving negligent use of non-motorized vehicles, e.g., bicycles, animal-drawn vehicles, and the rental electric scooters that clutter city sidewalks. If not expressly excluded, coverage may include negligent incidents with firearms.
As coverage and exclusion provisions vary between companies, the precise language of the insurance policy can make a tremendous difference. It is often imperative to obtain a complete copy of the insurance policy, research case law on the wording of critical sections, and draft the demand to the insurance company to fit the coverage provisions.
With both first-party and third-party insurance policies, insurers may be able to avoid responsibility for providing coverage upon a showing of misrepresentation in the insurance application. O.C.G.A. §33-24-7 allows an insurer to deny coverage where the misrepresentations are
(2) Material either to the acceptance of the risk or to the hazard assumed by the insurer;
(3) The insurer in good faith would either not have issued the policy or contract or would not have issued a policy or contract in as large an amount or at the premium rate as applied for or would not have provided coverage with respect to the hazard resulting in the loss if the true facts had been known to the insurer as required either by the application for the policy or contract or otherwise.
Misrepresentations may not be sufficient to void coverage for the benefit of innocent third parties at least for the minimum amount of liability coverage that is required by law for the specific category of vehicles. The burden is on the insurance company to show that but for the omission or misrepresentation it in good faith would either not have issued the policy or contract or would not have issued a policy or contract in as large an amount or at the premium rate as applied for. An insurance company cannot assert that a factor is material to the risk about which it has neither made inquiry or appraised its prospective insured.
An incorrect statement in an insurance application does not prevent recovery under the policy unless the insurer, with knowledge of the true facts, would not in good faith have issued the policy, not have issued a policy in as large an amount or at the given rate, or would not have provided coverage with respect to the hazard resulting in the loss.
Ken Shigley is a past chair of the Tort & Insurance Practice Section of the State Bar of Georgia and the Georgia Insurance Law Institute. He worked a decade in a law firm that represented numerous insurance companies in both defense of injury and death cases and in insurance coverage litigation. He is also a past president of the State Bar of Georgia with a long list of professional honors and distinctions.