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An insurance claim is a request to the insurance company for payment after a policyholder experiences a loss covered by their policy. For example, if a home is damaged by a fire and the homeowner has insurance, they will file a claim to begin the process of the insurance company paying for the repairs.
Insurance claims can be made for everything from property damage to injuries resulting from car accidents to annual medical checkups to life insurance death benefits.
The payment process can take between a few weeks and a few years depending on the type and size of the claim you make.
Types of insurance claims
Insurance claim definition
An insurance claim is a formal request filed by a policyholder seeking compensation for a covered loss.
There are several different types of insurance claims — the type of claim that you need to file depends on the policies that you have and what they cover.
Car insurance covers property damage or injury to others when you are at fault in an accident. If your auto insurance policy includes collision coverage, you can file a collision claim for damage your car sustains in an accident, regardless of fault. The addition of comprehensive coverage protects against damage caused by something other than a collision, like fire, theft, falling objects and natural disasters.
Most car insurance also includes uninsured and underinsured motorist coverage, which helps pay for damage or injuries if the at-fault driver doesn't have insurance or you're the victim of a hit-and-run.
Homeowners insurance covers the structure of your home, your personal property and your liability for injuries to visitors in your home. Homeowners insurance also includes additional living expenses (ALE) coverage, which reimburses you for a rental home or hotel if your home becomes uninhabitable. An insurance company will pay out a homeowners claim if the damage was caused by a peril covered by your policy, like fire, theft or wind.
Renters insurance pays out claims related to theft of or damage to your personal property, personal liability for damage or injury and additional living expenses if you need to relocate temporarily. Like homeowners insurance claims, renters insurance claims are subject to specific perils.
Health insurance claims are generally handled by your doctor's office. After your visit, you may pay a copay, and then the doctor's billing department will fill out a health insurance claim form to determine whether you owe a balance.
Most people aren't involved in the claims process until they receive an explanation of benefits stating that their claim is denied or that insurance will only cover a portion of the costs. At this point, you can appeal the decision if you feel that the services should be covered by your plan.
Life insurance pays a tax-free claim to your beneficiaries after they have provided the insurer with a copy of your death certificate. Life insurance is usually purchased to help your family with daily living expenses, college tuition and funeral expenses.
What does it mean to file an insurance claim?
Filing an insurance claim is the process of letting your insurer know about a loss that you've experienced and requesting that it cover the associated costs. Traditionally, the insured party — also known as the claimant — would fill out a proof of loss form.
Filing a claim has gotten much easier, and many companies offer options to file online, through an app or over the phone with an agent.
When filing an insurance claim, the policyholder must pay a deductible (if applicable) before receiving a settlement check from the insurance company.
How to make a claim
Filing an auto or homeowners insurance claim is a multistep process, and not all claims follow the same order or schedule. The time limit to file a claim varies by state, so it's important to start the claims process as soon as a loss event takes place.
We recommend following this process for a successful claims experience.
7 steps to file a home or auto claim
Step 1: File a police report
If your claim involves a car accident or any illegal activity, such as theft, arson or a traffic violation, contact the police immediately. Don't call 911 unless the situation is urgent — instead, use your police department's nonemergency line. Depending on where you live, you may be required to visit the police station and file your report in person.
Step 2: Document any damage
Next, take time to properly document the damage — you'll need to submit photos or videos to your insurer as proof along with your claim.
For car accident claims, take photos or videos of the scene before you move your car if you can do so without endangering yourself or others.
Document property damage claims before you clean up any mess to show your insurer the full extent of the damage.
Step 3: Review your coverage
Before you file your claim, make sure that you understand your coverages, limits and deductibles. Reviewing your policy will help you avoid filing a claim for a loss that isn't covered, or one where the cost of the repairs is less than your deductible. Your agent can help you with the process.
Claims that aren't covered may not affect the cost of your insurance, but they will stay on your record. Making multiple claims in a short period of time can cause your rates to go up because insurers believe that you are more likely to make future claims, regardless of the payout amount.
Step 4: Contact your insurance company
After you've determined whether your damage is covered, you need to file your claim with the insurance company. Many insurance companies allow you to file simple claims online. For larger claims, contact your agent directly or call the phone number listed on your policy.
Before you begin, make sure that you have all of the information regarding your claim handy, including the date of loss, police report (if applicable), receipts for damaged personal property, medical bills for injuries and any other documentation that you plan to use as proof.
Step 5: Prepare for the insurance adjuster
Once you've filed a claim, your insurance company will send an adjuster to evaluate the damage. It's the adjuster's job to determine how much your insurance company will pay out.
You may not need to be present during the adjuster's visit. However, walking your adjuster through the damage can be helpful. Speaking with your adjuster will give you an opportunity to show them the damage, discuss your claim and ask questions about your policy.
You can expect an insurance adjuster to:
- Inspect your home or vehicle.
- Review your policy to make sure that the damage is covered.
- Interview you regarding the incident.
- Request contact information for anyone who has information about the claim, like doctors, lawyers or witnesses.
After your adjuster sends their report to the insurance company, you'll receive a settlement offer. It's important that you review the offer carefully because after you accept it, your claim will be closed. If you're not happy with the settlement, you can dispute the claim by asking the company for a second review or hiring a public adjuster or attorney.
Step 7: Receive the claim payment and repair the damage
Once you've signed the settlement agreement, your insurer will pay the agreed-upon amount, minus your deductible. If your insurance claim involves property damage, you can move forward with hiring a professional to make repairs.
How do insurance companies pay out claims?
The payment process is different for every claim and is influenced by the type and size of the claim you make. Smaller claims take less time to process and are more straightforward, so you may receive a settlement check from your adjuster on the spot. When you make a larger claim, you can expect to receive multiple insurance checks throughout the repair process.
Auto insurance settlement
If the cost to repair your car is less than its overall value, your insurance company will issue a settlement check to cover the repair bill. Several factors dictate how the payout process works:
- If you own your car outright, the insurance company may send a check directly to you.
- If you choose to have the repairs made at one of your insurer's preferred auto body repair shops, your insurance company will likely send the check directly to the shop.
- If you have a lease or loan on your vehicle, then your loan company is named on your insurance policy — therefore the insurance check may be made out to both you and the lender. Your loan company may simply verify that your car was involved in an accident and sign the check over to you, or it might ask you to sign the check over to the loan company so that it can pay the repair company directly.
If the cost to repair your car is more than its actual cash value, your insurance company will consider it to be totaled. Instead of paying to repair your car, the insurer will send you a settlement check that is equal to the car's pre-accident value.
If you own your car outright, you can use the check to purchase a new vehicle. However, the money is yours, and you can choose to spend it however you like.
If you have a loan on your car, the insurance check will go toward paying off the remaining balance.
Home insurance settlement
Most home insurance claims are paid with multiple checks because claims are generally more complex and repairs take longer to complete.
Sometimes, the insurance adjuster will give you an advance on the total settlement amount at the end of their inspection so that you can get the repair process started. In this case, you can accept the check right away — it doesn't mean that you're bound to their initial settlement offer.
If your insurance claim includes damage to the structure of your home, your personal belongings and additional living expenses — also known as ALE insurance — you will usually receive separate settlement checks for each insurance category.
Along with receiving multiple insurance checks, the way that your claim is paid out can vary based on several factors:
- If you have a mortgage on your home, then the loan company is named on your insurance policy. Settlement checks that cover repairs will be made out to both you and the mortgage company — the company has a financial interest in your property and wants to ensure that the repairs are being made. Your lender may put the money into an escrow account and pay the contractors directly as the work is completed.
- The insurance company can send payments to your contractor if you sign a direction to pay form. It's important that you discuss this with your insurance professional before signing because some direction to pay forms can assign your entire claim over to your contractor, which gives them control over the claim. If you do choose to have payments sent directly to your contractor, make sure that you inspect the repair work thoroughly before your insurer sends the final payment and the claim is closed.
- The first insurance check will be based on the cash value — or depreciated amount — of the damaged items, so that your insurer can match the exact cost once you purchase replacements. If you decide not to replace the items, you can use this money however you like.
- Once you provide the insurance company with receipts showing that you have purchased the replacements, it will send the final settlement check for the difference between the cash value and what you paid for new items.
How long does it take to get an insurance check?
Depending on the amount of damage, settling insurance claims can take anywhere from a few weeks to a few years. For example, if you were involved in a car accident and only had minor damage, the process may be rather quick. However, if your entire home needs to be rebuilt after a fire, the construction may take a few years to complete. In that case, you'll receive multiple checks, including an advance on the settlement up front to get repairs started.
Can you keep insurance claim money?
If you own your car outright, you can use auto insurance claim money for anything you like. However, your insurance policy will not pay for secondary repairs resulting from the initial damage if you choose not to fix it.
The same holds true for homeowners insurance claims if you do not have a mortgage. Once in a while, you may have home insurance claim money left over after repairs are made, which is yours to keep unless your insurance policy states that unused funds need to be returned.
When not to file an insurance claim
Insurance companies keep a record of all filed claims, whether they're paid out or not. Not all claims will result in an increase in your insurance costs, especially if they're small, but multiple small claims within a short time period often raise rates.
Before you decide to file an insurance claim, review your policy to make sure that the damage or loss is covered. If you're unsure, you may be able to get some insight by calling your insurance agent.
For small claims, consider whether the cost of repairing the damage or replacing items is significantly higher than your deductible. For instance, if your computer is stolen and would cost $1,200 to replace but your deductible is $1,000, it may not be worth adding a claim to your record to receive a $200 insurance payout.
What happens when an insurance claim is made against you?
When somebody makes a claim against your insurance, your insurance company will work to determine whether you were at fault in the incident.
If you were involved in a car accident, your insurance company will review police reports and witness statements to determine whether you were more than 50% responsible for the collision. When your insurer determines that you were the at-fault driver, your insurance cost can increase up to 46% if you're not enrolled in an accident forgiveness program.
If someone is injured in your home, it's best for you to file a liability claim with your own insurance so that you can tell your side of the story and potentially have the claim dropped. Liability claims are often costly for insurance companies and usually result in a significant increase in rates — or even cancellation of your policy.
Disputing a claim
If you aren't satisfied with your auto insurance claim settlement, you feel that your claim was wrongly denied or your car was not properly fixed after an accident, you can dispute the claim by contacting your state's insurance department and submitting a complaint. Car insurance is regulated at the state level, and most states have a division that deals specifically with policyholder issues.
You can also hire an attorney to represent you. However, the cost may outweigh any increase in your settlement.
To dispute a home insurance claim or settlement offer, you can start by asking the insurance company to review your claim. If you aren't able to find a resolution with the insurance company, you can hire a public insurance adjuster to give you an independent estimate for the damage. Their estimate will either confirm that your insurance company's settlement offer is accurate or provide evidence that you can show your insurer to request an adjustment. In the event that a public adjuster finds the insurance settlement to be lacking and your insurer refuses to meet your requests, you can file a complaint with your state's insurance department and hire an attorney.
Can you cancel an insurance claim?
Most insurance companies will allow you to cancel or withdraw a claim, as long as you are the person who filed it. The claim will remain on your record but will show a $0 payout, and it should not affect your insurance rates unless you've made multiple claims over a short time period.
How soon can you file a claim after getting insurance?
You can file an insurance claim as soon as your policy becomes active, but the loss has to take place while the policy is in effect. For example, if you get in a car accident on the same day that your insurance policy becomes active, you can file a claim. However, if you were in an accident the day before you purchased your policy, you could not file.
What happens when insurance can't get a hold of the person at fault?
When your insurance company isn't able to contact the driver who caused an accident, it will try to contact the person's insurance company directly. If the insurance information is not available or the other insurance company is not cooperating, your insurer will generally cover the claim under your uninsured/underinsured motorist coverage. This type of claim will not raise your rates.
Can you file a claim with two insurance companies?
There is no law against having two insurance policies that cover a single vehicle or home. However, most policies have an "other insurance clause," which states that each policy will only pay for a portion of the damage. Insurance is meant to make you whole after a loss, and this clause ensures that you don't benefit financially from an insurance transaction.
Can you get insurance after a claim?
You can get insurance after filing a claim, but depending on the type and size of claim you file, the cost of your insurance may go up. After very large claims where you are at fault, your insurance company may choose not to renew your policy at the end of the policy period. Depending on where you live, insurance companies are required to give you a 30- to 60-day notice when deciding not to renew your policy so that you have adequate time to find a new insurer.