How does 'first-party coverage' differ from 'third-party coverage'?

First-party coverage is designed to protect the policyholder's own interests, which means it provides compensation for losses or damages incurred directly by the insured, regardless of fault. This type of coverage encompasses various scenarios, such as damage to the insured's property, medical expenses for injuries sustained by the insured, and other personal losses.

In contrast, third-party coverage focuses on claims made by others. It protects the policyholder from liability for damages or injuries they may cause to another person or their property. This is essential for instances where the insured might be held responsible for harm done to someone else, ensuring that any claims from a third party are covered.

The other options involve aspects that do not accurately represent the fundamental differences between first-party and third-party coverage. For example, while the cost of coverage may vary depending on several factors, the distinction between first-party and third-party coverage is not inherently tied to their price. Additionally, it is not correct to say that third-party coverage is solely about protecting the insurer's interests or to limit first-party coverage to property damage only, as it may also cover medical expenses and other personal losses. Thus, the correct understanding of first-party versus third-party coverage lies primarily in their focus on the policyholder's own interests versus those