What does first-party coverage protect against?

First-party coverage specifically protects the policyholder from losses that they incur related to their own property or person. This type of insurance responds to claims made by the insured for damages or losses they experience directly. For example, if the insured's home is damaged due to a fire, first-party coverage would provide financial compensation to the homeowner for repairs or replacement of their property. Similarly, if a policyholder faces medical expenses due to an accident, first-party coverage can help cover those personal injury costs.

In contrast, coverage types that deal with losses or claims made by or against third parties, such as liability judgments or losses related to others’ property, do not fall under first-party coverage. These are typically covered by liability insurance or different forms of coverage that focus on third-party risks, which the insured is not responsible for but may need to address.