What Is an Insurance Claim?
An insurance claim is a formal request by a policyholder to an insurance company for coverage or compensation Claim for a covered loss or policy event. The insurance company validates the claim (or denies the claim). If it is approved, the insurance company will issue payment to the insured or an approved interested party on behalf of the insured.
Insurance claims cover everything Claim from death benefits on life insurance policies to routine and comprehensive medical exams. In some cases, a third-party is able to file claims on behalf of the insured person. However, in the majority of cases, only the person(s) listed on the policy is entitled to claim payments.
KEY TAKEAWAYS
- An insurance claim is a formal Claim request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event.
- The insurance Claim company validates the claim and, once approved, issues payment to the insured or an approved interested party on behalf of the insured.
- For property casualty insurance, such Claim as for your car or home, filing a claim can cause rate hikes to your future premiums.
How an Insurance Claim Works
A paid insurance claim serves to indemnify a policyholder against financial loss. An individual or group Claim pays premiums as consideration for the completion of an insurance contract between the insured party and an insurance Claim carrier. The most common insurance claims involve costs for medical goods and services, physical damage, loss of life, and liability for the ownership of dwellings (homeowners, landlords, and renters) and liability resulting from the operation of automobiles
For property and causality insurance Claim policies, regardless of the scope of an accident or who was at fault, the number of insurance claims you file has a direct impact Claim on the rate you pay to gain coverage (typically through Claim installment payments called insurance premiums). The greater the number of claims that are filed by a policyholder, the greater the likelihood of a rate hike. In some cases, Claim it's possible if you file too many claims that the insurance company may decide to deny you coverage.
If the claim is being filed based Claim on the damage to property that you caused, your rates will almost surely rise. On the other hand, if you aren't at fault, your rates Claim may or may not increase. For example, getting hit from behind when your car is parked or having siding blow Claim off your house during a storm are both events that are clearly not the result of the policyholder.
However, mitigating Claim circumstances, such as the number of previous claims you have filed, the number of speeding tickets you have received, the frequency Claim of natural disasters in your area (earthquakes, Claim hurricanes, floods) and even a low credit rating Claim can all cause your rates to go up, even if the latest claim was made for damage you didn't cause.
When it comes to insurance Claim rate increases, not all claims are created equal. Dog bites, slip-and-fall personal injury claims, water damage, and mold can all act as signals of future liability for an insurer. These items tend to have a negative impact on your rates and on your insurer's Claim willingness to continue providing Claim coverage. Surprisingly, speeding tickets may not cause a rate hike at all. At least for your first speeding ticket, many companies will not increase your prices. The same Claim goes for a minor automobile accident or a small claim against your homeowner's insurance policy.
Types of Insurance Claims
Health Insurance Claims
Costs for surgical procedures Claim or inpatient hospital stays remain prohibitively expensive. Individual or group health policies indemnify patients against financial Claim burdens that may otherwise cause crippling financial damage. Health insurance claims filed with Claim carriers by providers on behalf of policyholders require little effort from patients; the majority of medical are adjudicated electronically.
Policyholders must file paper claims when medical providers do not participate in electronic transmittals but charges result from rendered covered services. Ultimately, Claim an insurance claim protects an individual from the prospect of large financial burdens Claim resulting from an accident or illness.
Property and Casualty Claims
A house is typically one of the largest Claim assets an individual will purchase in their lifetime. A claim filed Claim for damage from covered perils is initially routed via the Internet to a representative of an insurer, commonly Claim referred to as an agent or claims adjuster.
Unlike health insurance claims, the onus is on the policyholder to report damage of a Claim deeded property they own. An adjuster, depending on the type of claim, inspects and assesses Claim damage to property for payment to the insured. Upon verification of the damage, the adjuster Claim initiates the process of compensating or reimbursing the insured.
Life Insurance Claims
Life insurance claims require Claim the submission of a claim form, a death certificate, and oftentimes the original policy. The process, especially for large face value Claim policies, may require in-depth Claim examination by the carrier to ensure that the death of the insured did not fall under a contract exclusion, such as suicide (usually excluded Claim for the first few years after policy inception) or death resulting from a criminal act.
Generally, the process takes approximately 30 to 60 days without extenuating circumstances, affording Claim beneficiaries the financial wherewithal to replace the income of the deceased or simply cover the burden of final expenses.
Filing an insurance claim may raise future insurance premiums.
Special Considerations
There are no hard-and-fast rules Claim round rate hikes. What one company forgives, another won't forget. Because any claim at all may pose a risk to your rates, understanding your policy is the first step toward protecting your wallet. If you know Claim your Claim first accident is forgiven Claim or a previously filed claim won't count against you after a certain number of years, the decision of whether or not to file a claim can be made with advance knowledge of the impact it will or won't have on your rates.
Talking to your agent about the Claim insurance company's Claim policies long before you need to file a claim is also important. Some agents are obligated to report you to the Claim company if you even discuss a potential claim and choose not to file. For this reason, Claim you also don't want to wait until you need to file a claim to inquire about your insurer's policy regarding consultation with your agent.
Regardless of your situation, Claim minimizing the number of claims you file is the key to protecting your insurance rates from a substantial increase. A good rule to Claim follow is to only file a claim in the event Claim of catastrophic loss. If your car gets a dent on the Claim bumper or a few shingles blow off of the roof on your house, you may be better off if you take care of the expense on your own.
If your car is totaled Claim in an accident or the entire roof of your house caves in, filing a claim becomes a more economically feasible exercise. Just keep in mind that even though you have coverage Claim and have paid your premiums on time for years, Claim your insurance company can still decline to renew your coverage when your
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