The Complete Ins and Outs of the Insurance Claim Process
TLTR: This article explains what an insurance claim is. It also highlights the different types of insurance claims and explains the steps involved in an auto insurance claim process.
You’re cruising down the open road on a sunny day. The traffic is light and you’re not speeding. But, despite your best cautionary efforts, you get into an accident, and there’s serious damage!
What do you do now? Who do you go to for help? What are your legal obligations? Such situations are confusing and stressful. Fortunately, you have your insurance agent to guide you out of the clutter and walk you through the necessary steps of an insurance claim process.
In this blog
What Is an Insurance Claim?
An insurance claim is a formal request by an insured policyholder to an insurance company for financial coverage or compensation for a covered loss. The company reviews the claim and decides whether to validate it or reject it.
If your claim is approved, the insurance carrier will pay you the covered amount or pay the interested party on your behalf. The payment provided is known as the benefit or payout.
Depending on the type of policy you choose, insurance claims can cover auto accidents, accidents at homes or businesses, or damage caused by natural disasters like storms, floods, and fire.
How Does the Insurance Claim Process Work?
An insured party pays premiums to an insurance company to maintain an insurance contract. As long as the insured regularly pays the premium, the carrier will maintain the policy.
Note: The rate of your premium might increase if you file multiple claims. In some cases, your insurance carrier might even decide to deny you coverage if you have a high rate of insurance claims.
If you are responsible for damaging someone else’s property, your premium is almost certain to go up. For example, if you crash your car into your neighbor’s fence and file a claim, your premium moving forward will increase. Conversely, your premium amount will most likely stay the same if you aren’t at fault.
Utilizing insurance claim management software has allowed insureds and insurers alike to carry out the claims process by eliminating the need for face-to-face meetings. As long as both the parties have a computer and internet access, all of the processes can be completed from the comfort of their homes.
What Are The Types Of Insurance Claims?
People get insurance as a means of protecting themselves from unexpected losses. However, policyholders need to understand that it isn’t uncommon for insurance carriers to sometimes undervalue, delay, underpay, or even downright deny a claim without any justification. So, it is vital to understand the different types of claims so that you can take the necessary steps.
First-party insurance claims
First-party insurance claims refer to insurance that an individual purchases directly from an insurance provider. When a policyholder experiences a loss, is injured or ill, they can file a claim for reimbursement or payment that can help them cover the financial burden.
Third-party insurance Claims
In instances where the liable party fails to file a claim with their insurance provider, you may need to file a claim with their insurance provider yourself. This is known as a third-party insurance claim.
Auto Insurance Claims
Every state in the U.S. requires drivers to carry insurance. Some drivers need to carry the state-minimum coverage. Others pay additional premiums to equip themselves with, among other things, collision coverage and roadside assistance policies.
If you’re involved in a car accident, you need to file a claim with your insurance provider. Even if the other driver was at fault, you should still file a claim. It isn’t uncommon to see instances where the other driver’s insurance provider refuses to pay. Sometimes, the other driver is uninsured or underinsured, or the liable party flees the scene before proper contact has been made.
Auto insurance claims comprise property damage, physical injuries, uninsured or underinsured motorist coverage, liability, and collision coverage.
For example, if you got into a car accident where the other party was clearly at fault, and the liable party fails to file a claim or get it approved, you will need to take the matter into your own hands and make a claim on their behalf.
This also applies if you were injured as a passenger or as a bystander.
The third-party insurance claim also applies to injuries sustained at someone’s home. Homeowners insurance or renters insurance should cover injuries that the guest or visitor suffered if it was found to have been caused due to neglect in proper house maintenance.
Life Insurance Claims
Unlike other types of insurance claims, the insured party doesn’t file a life insurance claim, for obvious reasons. For a life insurance claim to get approved, the death certificate along with the appropriate claim forms must be submitted, usually by a family member of the insured.
However, before the claim is approved, the carrier might employ an in-depth investigation to ensure that the death of the insured wasn’t caused due to any factors that fall outside the policy.
Acts of suicide are usually excluded for the initial years after the inception of the policy. Furthermore, death resulting from criminal acts are also excluded from the policy.
Health and Dental Insurance Claims
Hospital stays can be costly. Health procedures like surgeries and dental work will add to the already elephantine medical expenses. A health policy works to indemnify the policyholder of extensive financial loss. While the premiums are high, the benefits usually outweigh the drawbacks if a person becomes hospitalized.
In most cases, health insurance claims can be easily acquired, as most processes can be carried out electronically.
Insurance companies may deny the claim if the insured is found to have gotten injured or ill after engaging in risky or dangerous activities. Such acts go against the terms of the policy.
Bottom line, you need to understand the scope and limitations of your policy to avoid having to pay for any health expenses out-of-pocket.
Homeowners Insurance Claims
You file a home insurance claim if your property sustains loss or damage against covered perils. This can include wind damage from natural disasters like storms and hurricanes or internal water damage from burst pipes.
Note: You must also inform your insurance carrier if someone else is harmed while on your property. If they take any legal action against you, your insurance company is obligated to defend you under the liability section of your policy.
Renters Insurance Claims
Claims under a renters insurance policy work in the same way that homeowners insurance claims work. The only difference is that you would file a claim in the event that your personal belongings are damaged or if someone takes legal actions against you for any injury they sustain while within your property.
What Is an Auto Insurance Claim Process?
According to Statista, America is among the busiest nations when it comes to road traffic with almost 280 million vehicles in operation.
So, it’s essential to understand what to do if you find yourself in a road accident.
Note: According to the National Highway Safety Administration (NHTSA), despite 2019 marking the third year in a row seeing fewer traffic accidents, preliminary 2020 data shows that there were more fatalities per miles traveled, even though there were fewer cars on the road.
Before anything else, make sure that you’re safe. Damaged vehicles can be very dangerous. So, it’s important to take the necessary precautions and leave the affected area safely.
Once you’re safe, you can move on to making your insurance claim. The process typically is comprised of seven basic steps:
Contact the Police
The first thing you need to do when you get into an accident is to call the police. Insurance carriers will prefer to see an unbiased report from a third party to conduct an accurate assessment of the situation.
The police may also need to talk to all the involved parties to file an accurate report. Follow the instructions they give you and provide them with as much information as you can about what happened. Apart from preparing a thorough report, their presence can also work to de-escalate any violent or other unfavorable situations.
Make sure that you’ve gathered all relevant information about the accident. Take pictures of the damage your vehicle sustained, the incident site, and any other property damage. You can also collect information such as:
- Name, address, and phone number of the driver or drivers involved
- Photo of their driver’s license
- Contact information of the bystanders or witnesses
- Exact date and time the incident occurred
- The insurance status of the drivers involved
- The license plate details
- Once the police arrive, make sure to note their names and their badge number.
Note: Make sure that you don’t admit to, or accuse anyone of fault. It might end up backfiring later while receiving compensation from the insurance provider.
Contact your Broker/ Agent
Once all the information is collected, contact your insurance agent/broker or company as soon as you get home. As professionals, they will inform you how to proceed. You will need to provide them with all the details and information regarding the damage, including the items that were destroyed or lost.
You can also provide them with any picture or video that you’ve taken on your phone that can help illustrate the situation. Once you have spoken to your agent or broker, an adjuster will follow up with you.
An adjuster can help you understand the extent and type of coverage you might be able to receive from your commercial auto insurance policy.
Commencement Of The claim investigation
Once the claim has been reported, an adjuster will come in to investigate, evaluate, and determine the scope of the lost hat that is covered by the policy. Adjusters work on behalf of the insurance company and will use the information you have gathered as evidence to assess the situation.
The adjuster also serves to identify the liable party. You can help the adjuster make the correct assessments by providing them with any additional witness information or the other parties’ contact details.
Evaluation of The Damage
In order to assess the extent of damage more accurately, the adjuster hires professionals like mechanics and car specialists for their expert analysis and advice. Once the evaluation is completed, the adjuster will provide you with a list of services that can help with the repairs. While you’re not obliged to choose these services, it can help you save time on research.
Review Of The Policy
Once the investigation is complete, and all the information has been provided, the adjuster will then go through your insurance policy to determine what aspects are covered and what aspects aren’t.
The cost of the damage and the amount of compensation you’ll receive is calculated. They will also inform you of any deductibles that you might need to pay. Once you have gone through all the estimates, work for your claim settlement will finally begin.
Arrangement of The Payment
This is the final step of the insurance claims process. The amount of time to receive the payment will depend on the severity and complexity of the situation.
But once you are compensated and all the repairs have been completed, the adjuster will contact you to settle your claim. If you are still dissatisfied with the settlement offer, you can consult with your insurance agent.
How Long Does The Insurance Claim Process Take?
The exact time it takes to settle a claim varies according to the state and the insurer. An insurance adjuster should contact you within one to three days of filing the claim. Taking all things into consideration, it takes around a month to 45 days for the entire insurance claim process to be completed.
Note: There’s also a chance of your claim getting denied due to unique circumstances or the nature of the accident. Consult with your insurance agent or broker to help you with the process.
Are you looking to cover your car with the best auto insurance available? Find a local insurance agent near you today.
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