What is a first party claim?

A first party claim is best defined as a demand for payment made by the policyholder directly to their own insurance company under their insurance policy. This type of claim arises when the insured party seeks compensation or benefits for a loss that directly affects them, such as damage to their property or incurred medical expenses. Since the policyholder has a contractual relationship with their insurer, they initiate the claim process to recover the costs associated with the covered events specified in their policy.

This understanding underscores the essence of first party claims, which involve only the insured and their insurer, emphasizing the importance of the insurance policy in facilitating the claim. The other options do not accurately represent the nature of a first party claim, as they either refer to claims made by third parties or describe different types of insurance interactions.