Insurance
What is the difference between 1st party and 3rd party coverage?
Organization ApprovedSource Verified
Summary
3rd Party coverage is the at-fault vehicle's auto insurance and is verified first as primary. 1st Party coverage is our patient's own (or the host vehicle's) insurance and is verified as secondary only when the at-fault driver was uninsured or our patient was at fault.
- 13rd Party Coverage: the auto insurance of the at-fault vehicle, or of the driver/owner of the vehicle our patient rode in if that driver was at fault. Verify it first as the primary source.
- 21st Party Coverage: our patient's own auto insurance (even if they were not in their vehicle), the insurance of the vehicle they rode in, and that vehicle owner's insurance. A minor child is covered under the parent's policy even if the parent's vehicle was not involved.
- 3Verify 1st Party as secondary only if the at-fault driver was uninsured or our patient was at fault.
- 4If our patient was a passenger and liability has not been determined, file a lien against both drivers to cover all the bases.
- 5Bodily Injury Liability (BI): the 3rd party carrier owes only when their insured injures our patient through negligence; there is no contract with our patient, so benefits cannot be assigned under that policy.
- 6Property Damage Liability (PD): the patient should get an independent dealership estimate using factory original parts, since carriers use the PD amount to judge whether an injury could have occurred.
- 7Medical Payment (Med-Pay): optional, generally subrogated except in Missouri; covers policyholder, household relatives (unless excluded), and passengers regardless of fault, usually $1,000–$5,000.
- 8Excess Med-Pay pays only after health insurance is billed first; if the patient has health insurance we cannot bill Excess Med-Pay, because we cannot bill health insurance.
- 9Personal Injury Protection (PIP): optional or state-mandated no-fault coverage, excess to Med-Pay when both exist, covering the policyholder, household relatives, and passengers without their own insurance, plus other losses such as lost wages.
- 10Uninsured Motorist (UM) pays bodily injury only when the at-fault driver has no coverage or is hit-and-run; Underinsured Motorist (UIM) makes up the difference when the at-fault limits are insufficient.
Important
A case should have only Med-Pay coverage just when the patient is at fault, or the at-fault driver was uninsured and the patient has no UM coverage. In states with no lien statute, we need a Letter of Representation/Protection (LOR/LOP).
Citation
CA Manual, Insurance Verification: Types of Insurance, p. Insurance/Billing · Revised 2/9/26Answers source the CA Manual first; the Medisoft guide is used only where the CA Manual does not cover the task.