Alberta General Insurance Level 1 Practice Exam

First-party coverage is defined by its protection for the policyholder’s own assets, which is a key distinguishing feature in insurance. This type of coverage typically applies to losses or damages incurred directly by the insured, such as damage to their own property, personal belongings, or costs incurred from claims like theft or natural disasters.

The focus of first-party coverage is on the insured party, ensuring that they receive compensation for their own financial losses, regardless of any external liability. This is critical for individuals and businesses looking to safeguard their investments and maintain financial stability in the face of unforeseen events.

In contrast, third-party coverage focuses on liability protection, where the insurance policy would cover claims initiated by other parties for damages caused by the policyholder. Thus, while both types of coverage play essential roles in an insurance portfolio, recognizing the primary purpose of first-party coverage is fundamental to understanding the overall landscape of insurance products.