Insurance is something people buy and hope they don’t need. It is intended to help the policyholder recover from the financial burden following an accident or loss.
After an accident, a policyholder makes a formal request to the insurance company for compensation. This request is called a claim. Understanding the claims process will help you move more smoothly through the process of filing a claim.
Types of Insurance Claims
Insurance coverage is available for a variety of perils and losses. For instance, homeowner’s insurance helps the homeowner recover after a fire, theft, weather damage, or another covered event.
Auto insurance helps drivers recover from an accident that causes vehicle damage and injuries related to the accident. Different coverages apply depending on whether the claim is for the policyholder’s vehicle or someone else’s property.
Health insurance is designed to help cover medical expenses. Many types of health insurance focus on covering preventive care to help people avoid future health problems.
Life insurance is a type of insurance that pays a designated beneficiary a sum of money upon the death of the insured person. It can provide money to help loved ones be financially secure after the passing of the insured.
These are some of the more common types of insurance. Generally speaking, if there is a danger of loss, there is an insurance policy to cover it.
The Claim is Reviewed for Validity
When a policyholder makes an insurance claim, the insurance company reviews the policy and the incident. The purpose of the review is to help the insurance company determine the exact details surrounding the claim and decide to what extent the policy covers the damage or injuries.
For instance, for a car accident, the insurance company will want to know the weather conditions and if any outside factors may have contributed to the accident. For a home insurance claim, the insurance company will want to determine the exact cause and extent of the damage.
Once the circumstances are reviewed, the insurance company will either deny or approve the claim. If approved, the claim will move forward for payment.
How Much Will Be Paid?
The purpose of insurance is to reimburse the policyholder after a loss. Reimbursement may not equal the maximum coverage of the policy. For example, if the insurance company approves a claim for $20,000, a policy for $100,000 of coverage will only pay the $20,000 claim.
The policyholder must document the damage sustained from a covered loss. For automobile, home, and personal property insurance claims, the insurance company will want to assess the damage and estimate the cost of making repairs or replacing damaged property.
To receive appropriate homeowner insurance compensation, the policyholder must have documents showing the value of their belongings as well as the extent of damage they have sustained.
Some types of insurance have a deductible or a co-payment that the policyholder must pay. For instance, health insurance might have an amount listed as a deductible. The deductible is the amount the policyholder must pay before the insurance company begins to pay. Auto insurance often has a deductible so that the policyholder pays for part of the repairs, and the insurance company pays the remainder of the covered repair costs.
Who Will Receive Payment?
The policyholder may not always receive payment directly from the insurance company for a claim. Sometimes the service provider is paid directly. For health insurance, the doctor or the hospital may be paid directly by the insurance company. For home repairs, the contractor may be paid directly by the insurance company.
In other cases, the policyholder receives payment directly from the insurance company. It is then the policyholder’s responsibility to pay the service provider for the repairs or replacement.
How Are Future Insurance Premiums Affected?
In general, an insurance claim is an indicator that there is a higher risk of future insurance claims. That is why a policyholder may see a higher premium when renewing a policy after a claim.
Insurance companies are continually assessing the probability that there will be a claim. When the probability of claims increases, insurance rates increase as well. Therefore, some policyholders choose not to file a claim on a small loss to avoid an increase in rates.
Understanding the claims process can help a policyholder know what to expect when filing a claim. Plus, knowing the process helps cut down on frustration and can help the claims process to go more smoothly.
ABC Dennis Insurance
ABC Dennis Insurance is an independent insurance agency established in 1997 that provides insurance to its customers. If you have not reviewed your insurance coverages this year, please call our office at (813) 949-7765 or email us.
We can help with all your insurance needs. As an independent agency, we find the best insurance coverage with the most competitive rates.