What is an Insurance Claim?

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Definition:

An insurance claim is when you contact your insurance company and ask them to cover damages that fall under the scope of your policy.

🤔 Understanding insurance claims

Insurance is there to cover some of your losses when damage occurs to your vehicle, home, and other insured personal property. If an incident happens that’s covered by your insurance company, you’ll have to file a claim for them to cover those losses. Each insurer has a formal claims process in place. You’ll supply the necessary paperwork and information, including a description and photos of the damage. For your insurance company to fulfill your claim, you’ll often have to go through a lengthy process to prove what caused the damage and whose responsibility it is to cover it. Once your insurance company approves your claim, it will usually send a check or deposit to you or whomever it owes the money to.

Example

Suppose you’re driving down the highway when a deer runs in front of your car, and the front end of your car sustains damage. You head to your auto insurance website, where you file a claim. Your insurance company asks questions about the accident and the damage, and directs you to include photos to go with your claim. The insurance company would likely have you take the car to a repair shop to determine how much the damage will cost to fix. After sending an insurance adjuster to verify the damage, it sends you a check so you can take your car to the shop.

Takeaway

Filing an insurance claim is like applying for a loan at the bank…

When you head to your local bank to take out a loan, the bank is going to ask for a lot of information from you. The lender wants proof that you can afford to pay back that loan. And if you can’t provide proof, you might be out of luck. Your loan application is kind of like the form you fill out to file an insurance claim — You give the insurance company the information and proof it needs of the accident, and it will hopefully give you money in return.

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What is an insurance claim?

An insurance claim is a request you make to your insurance company when you’ve suffered a financial loss that your insurance policy may cover. When you sign an insurance contract, your insurer promises to cover some or all of your losses that fall under the scope of your policy when unexpected expenses pop up. But that process isn’t automatic — Instead, you have to file a claim to provide your insurance company with the necessary information to verify your claim and send your money.

What are the types of insurance claims?

There are different types of insurance claims that you may have to file depending on your life circumstances. Many of us will probably end up having to file a claim at some point.

  • If you own or rent a home, you probably have homeowners or renters insurance to protect you from potential losses. If your home is damaged for a covered reason, you can file a claim with your insurance company.
  • Most states require that every driver buys an auto insurance policy that includes liability insurance (meaning a policy that covers property damage or personal injury of another person). If you’re in a car accident, regardless of who is at fault, you can file a claim with your car insurance company.

Property and auto insurance are two types of claims that many people have to file at some point, but they aren’t the only ones. Other types of insurance claims you might have to file include health insurance, life insurance, or umbrella insurance.

How do you file an insurance claim?

Suppose you’re in a car accident and need to file a claim with your insurance company. First, you may need to call the police and file a police report. The laws vary from state to state, but some places require that you call the police after a car accident if someone gets hurt or if the financial damages exceed a certain amount.

Next, be sure to get everything down on paper and exchange insurance information with the other driver. Document the damage on both vehicles and take photos. If you can agree on what happened upfront, it will save your insurance companies some back and forth later on.

After that, it’s time to contact your insurance company. Depending on your insurer, you might need to call and speak to your insurance agent to get the auto claims process started. Otherwise, many insurance companies have a website or app where you can file a claim.

What is the claim process?

Contacting your insurance company and filing a claim is only one step in the process. The whole ordeal doesn’t automatically resolve itself at that point. Your insurance company will do some research on their end to verify the facts surrounding the case.

Once you file a claim with your insurer, the company will take a look at your policy to see what it will cover. Depending on your coverage, your policy might cover damage to both your car and the other. On the other hand, you might just have liability insurance, in which case the policy would only cover damage to another driver’s vehicle or person.

After you file your claim and the company verifies your coverage, it’s time to get an estimate of the damage. Your insurer will send you an estimate of how much it’ll cover, either after sending a claims adjuster to inspect the damage or instructing you to take the car to a shop. Often the company sends the payment to you, and then you can use it to get your car fixed.

Keep in mind that your policy probably includes a deductible of some kind, so you won’t get the full amount for the damage. Suppose the insurance company estimates your car has $1,500 of damage and you have a deductible of $500. Your insurer would send you $1,000 to cover its part of the costs.

What should I expect when filing an insurance claim?

When you’re in a situation where you have to file an insurance claim, you’re probably already dealing with a lot of stress. You’ve already had damage done to your car or home, and the last thing you want is a complicated insurance claims process. Going in with eyes wide open and knowing what to expect can help to make things go a lot more smoothly.

First, know your deductible. Then you won’t be surprised when you realize your insurance company will be paying you a lot less than you originally thought because of a high deductible.

Next, expect that there might be an investigation process. While the process is pretty cut and dry if you’re in an accident by yourself, things get a bit stickier when there are more drivers involved. The insurance companies might have to do a bit of digging to figure out who is really at fault for the accident, which can make the whole process take longer.

How do I deal with problems with an insurance claim?

In a perfect world, people would be able to file insurance claims and resolve them right away. But unfortunately, that’s often not the case. There are a few things you can do to deal with problems you’re having with your insurance claim.

First, reach out to your insurance representative. If you let them know you’re unhappy with the customer service you’re receiving or feel that things aren’t going well, just let them know. They might be able to speed up the process to ease some of your concerns.

Next, be sure to take a look at your auto insurance policy. You’ll be better equipped to handle conversations with your insurance company if you know exactly what your policy covers. That will save you the trouble of complaining to your insurer and then later discovering that your policy wasn’t as comprehensive as you thought it was.

Finally, there are resources you can turn to if you’re not able to resolve problems directly with your insurance company. First, you can contact your state’s insurance regulator. Part of that agency’s job is to take complaints about insurance companies. Next, consider contacting an attorney. If you think you should be getting a big chunk of money from your insurer, and they aren’t paying, it might be worth talking to an attorney that specializes in this type of problem.

When should you file an insurance claim?

The reason that you pay your insurance premiums is so that your insurance company will be there to cover your losses in the event of unexpected damages. In general, you can file an insurance claim anytime you have sustained a financial loss that is within the scope of your insurance policy. So if you have homeowners insurance and your home has sustained some damage, you can file a claim. The same goes for auto insurance.

There are a few situations in which it’s particularly important to file a claim. First, both auto and homeowners insurance policies include liability coverage that protects you if you injure someone on the road or if someone gets hurt at your house. If there’s an accident where someone gets hurt, that’s a good reason to file a claim to help you navigate a potential lawsuit.

You should also file a claim if the financial loss exceeds your deductible and you can’t pay the amount out-of-pocket. Insurance is there to protect you against excessive financial losses, so you might as well take advantage of it.

While we want to make sure our insurance coverage is there when we need it, there are some situations when it doesn’t make sense to file a claim. Let’s say you’re in a car accident and your car sustains some damage. You get a quote for the damage and it’s going to cost about $750 to fix. But your auto insurance policy includes a deductible of $1,000, meaning that’s how much you have to pay out-of-pocket before insurance covers anything.

In this case, you’ll pay the entire amount out of your own pocket. But if you ended up filing the claim anyway, you still might see an increase in your insurance premium. In the long run, filing a claim would probably end up costing you money.

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