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🔒 '''First-party coverage''' is [[Definition:Insurance coverage | insurance]] that pays the [[Definition:Policyholder | policyholder]] directly for losses sustained to its own property, income, or data — as opposed to [[Definition:Third-party coverage | third-party coverage]], which responds to [[Definition:Liability | liability]] claims brought by someone else. Common first-party products include [[Definition:Property insurance | property]], [[Definition:Business interruption insurance | business interruption]], [[Definition:Inland marine insurance | inland marine]], and the first-party insuring agreements within a [[Definition:Cyber insurance | cyber insurance]] policy, such as incident-response costs and data-restoration expenses.

📄 When a covered event strikes — a fire destroys a warehouse, a ransomware attack encrypts critical servers — the policyholder files a [[Definition:Insurance claim | claim]] under the relevant first-party provision. The [[Definition:Claims adjuster | adjuster]] determines the extent of the loss, applies the [[Definition:Deductible | deductible]] or [[Definition:Self-insured retention (SIR) | self-insured retention]], and the [[Definition:Insurance carrier | carrier]] indemnifies the insured up to the [[Definition:Policy limit | policy limit]]. Valuation methods matter enormously here: a policy written on a [[Definition:Replacement cost | replacement-cost]] basis pays what it takes to restore the damaged asset to its pre-loss condition, while an [[Definition:Actual cash value (ACV) | actual-cash-value]] form deducts [[Definition:Depreciation | depreciation]], which can produce a significantly smaller payout.

💡 Understanding the first-party versus third-party distinction is foundational for anyone structuring a commercial insurance program. Gaps between the two — a [[Definition:Cyber insurance | cyber policy]] that covers [[Definition:Incident response | incident-response]] costs but not the resulting [[Definition:Regulatory fine | regulatory fines]], for instance — are among the most common sources of uninsured exposure. Clear classification also streamlines the [[Definition:Claims processing | claims process]], because first-party losses are resolved between the insured and its own carrier, without the adversarial dynamics that often accompany [[Definition:Liability | liability]] disputes involving plaintiffs' attorneys and courts.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Third-party coverage]]
* [[Definition:Property insurance]]
* [[Definition:Business interruption insurance]]
* [[Definition:Cyber insurance]]
* [[Definition:Replacement cost]]
* [[Definition:Actual cash value (ACV)]]
{{Div col end}}

Definition:First-party coverage - Revision history

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