An insurance contract is a two party agreement between the insurance company and the insured. Out of all the variations of insurance out there, insurance contracts really fall into two main categories:
a) Indemnity Insurance (1st Party Claims)- This is for a loss or damage to ones own property. Under an indemnity agreement, if your insured property is damaged or destroyed by a covered peril, you can make a claim against your insurance policy to have the insurance company pay for the property.
b) Liability Insurance (3rd Party Claims)- This coverage protects you from your actions that result in some form of damage or harm to someone else. If you become responsible to pay someone else for damages, this portion of your coverage would cover you.
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By: Alexander Perchekly