What does "first-party coverage" protect?

First-party coverage is designed to protect the insured against losses or damages that they themselves experience. This type of coverage extends to situations where the insured's own property is damaged or lost, as well as situations where they incur expenses for which they are directly responsible. For instance, if a homeowner's property is damaged in a storm, their first-party coverage would cover the costs of repair or replacement. This means the insured is financially protected for their own losses, rather than for any liabilities they might owe to someone else.

The other options refer to different forms of coverage: liabilities incurred by third parties relate to third-party coverage, legal costs come under liability insurance specific to lawsuits, and property damage caused by the insured would typically involve liability if it affects another person’s property. First-party coverage is specifically focused on protecting the insured's interests directly.