Insurance can be used to provide financial protection for many different policyholder interests, from cars to computer data to the policyholder’s own life. Regardless of which interest is being protected by an insurance policy, there are only two types of possible insurance coverage, called first-party coverage and third-party coverage. All insurance contracts provide one or both coverages. So what are they? And how are they used in common types of insurance policies?

I. First-Party Insurance...