What is an insurance claim?
An insurance claim is a formal application by a policyholder to their insurance company for compensation for the insured loss or damage. This can cover auto accidents for auto insurance, hurricane damage for homeowners policies, and emergency surgery for health insurance.
Policyholders can only submit claims for losses or events specified in their policy documents. Therefore, it is very important for them to read the content carefully to understand what they are insured for. An experienced insurance professional can also help you sort out the jargon.
1- Insurance Claims Process:
Insurance plays an important role in protecting our assets and those of our loved ones. The irony is that often people buy these financial products hoping to never use them. But accidents and disasters happen without warning – and when they do, policyholders can be grateful that they have proper coverage.
If something goes wrong, the policyholder will need to make an insurance claim to access the benefits of their policy. This often leads to complicated processes, but with the right knowledge, insured groups and individuals can find a seamless way to receive payments.
In our customer training series this time, Insurance Business will discuss the insurance claim process, how it works for various types of policies and how it affects insurance premiums. We encourage insurance brokers and agents to share this article with their clients to help them navigate the often complex claims process.
2- How do you file an Insurance Claim?
The Insurance Information Institute, an industry association dedicated to helping people understand insurance, has shared these six practical steps to make filing car insurance claims easier.
- Report the accident to your insurance company as soon as possible: This also applies if the driver is innocent and the damage appears to be minor. The insurer can also notify the policyholder if the incident is covered.
- Access company mobile apps to file claims: Most insurance companies now have apps that allow policyholders to report claims, upload receipts, and check claim status.
- Find out what documents are needed to support the claim: This usually includes a claim form and a copy of the police report.
- Pay attention to deadlines: Insurers impose strict deadlines for filing insurance claims to prevent fraud.
- Find out if the policy covers rental cars: this is important if the policyholder’s vehicle is being repaired and becomes unusable.
- Provide any information requested by the insurer: Triple-I advises motorists to fill out the claim form carefully to avoid processing delays and to keep “thorough and organized records” of everything relating to the claim.
It’s a good idea to save your insurance agent’s phone number. While a general office phone number is great, it’s even more helpful to have your agent’s exact phone number and extension. Be sure to call the agent or broker who recently submitted this for their phone number.
3- How does an insurance claim affect premiums?
Depending on the type of insurance, the insurance provider and the details of the claim, the insured event can have a direct or indirect impact on the price of the premium.
For example, a policyholder’s claims history is one of the main factors affecting home and auto insurance rates. Accident claims may indicate a high-risk driver, while many weather-related home insurance claims may reveal that the home is located in a disaster-prone area. Both cases can lead to higher insurance premiums.
However, health insurance company rates work very differently. The Affordable Care Act (ACA) prohibits insurance companies from increasing a person’s premium based on their medical condition. All changes in insurance rates must be based on the overall risk pool that belongs to the policyholder. Many states have similar laws.
To get an estimate of how much premiums will change next year, health insurance companies estimate how high medical care costs will be for each risk group for the current year. Depending on this calculation, health insurance premiums can go up or down. For example, if insurance companies predict that healthcare costs will skyrocket for men ages 40 to 45, a 42-year-old male policyholder could see his insurance rates increase, regardless of whether he has filed one or more health insurance claims.
4- When is filing an insurance claim useless?
The sage advice that financial experts give consumers is to be smart about what they claim. If the cost of damage to the vehicle or property is less than or slightly more than your excess, it may not make sense to file a claim. The deductions exist precisely to prevent insurers from accepting a flood of small, low-value claims.
Another piece of advice that consumer advocates give policyholders is to talk to their representatives about the insurance company’s policies long before they need to file a claim. Some agents are required to report discussions of potential claims to the insurance carrier, even if the policyholder chooses not to make a claim, as this may reflect the possibility of materializing risks that could impact premiums. Talk to your insurance company about these things now for the best advice about your situation and policy.
How about you? Do you have experience filing insurance claims that you would like to share? Use the comment box below.