Insurance Claims – Meaning, Types, & How They Work?

An insurance claim can be a formal request a policyholder makes, which, in this case, is you, to their insurance agency, demanding for payment after a certain covered incident. These incidents may include anything and everything that your insurance policy covers, for instance, a stay at the hospital, a theft, or maybe a natural disaster. 

The payout that the insurance provider offers is meant to cover the expenses that are apparently associated with the covered incident. An insurance claim is only issued to the individual who has their name on the policy, who is more popularly known as the designated beneficiary. 

An insurance claim depends on what situation you are in and what kind of policy you have purchased. 

So, without any further delay, let us now explore more about insurance claims and every other aspect that is related to an insurance claim. 

Key Points To Remember

• An insurance claim is defined as a formal request that a policy-holder claims to the insurance company to provide compensation or coverage for a policy event or a covered loss. 

• The insurance company will initially validate the claim and, once it gets the approval, issue the payment to the insured party or an approved insured party in case the insured is not present. 

• In the case of property casualty insurance, for example, the insurance for your home or car, filing an insurance claim may cause a hike in the rates for future premiums. 

Read More: Who Is A Underwriter? Understanding The Underwriting Process

Insurance Claim: How Does It Work?

The primary purpose of a paid insurance claim is to indemnify the policyholder against a covered financial loss. An individual or a concerned group pays the premium to consider the completion of the insurance contract between an insurance carrier and the insured party. 

Some of the typical insurance claims involve the cost of medical goods and services, loss of life, physical damage, liability for dwelling ownership, and liability resulting from the function of automobiles. 

In the case of casualty and property insurance policies, regardless of whose fault it was or what the scope of the accident was, the total number of insurance policies that you file will have a direct impact on the rate that you are paying to gain coverage, which typically happens via installment payments known as insurance premiums. 

The chances of the rates to hike will increase with an increase in the number of claims that a policyholder claims. In selective cases, it is also possible for the insurance company to refuse coverage if you choose to file too many claims. 

If you are making an insurance claim based on property damage that you may have caused, the rates will definitely rise. On the other hand, if you are not at fault, the rates may remain stagnant. For instance, your house getting damaged due to a cyclone or a truck hitting your car from the back while you had parked will indeed not be counted as your fault as a policyholder. 

Insurance Claim: Types

There are many areas where you can make an insurance claim. While you may know that there are multiple insurances available in the market, the insurance claims are also many. 

The most often claimed insurance are: 

• Health insurance claims
• Property and casualty claims
• Life insurance claims 
• Car insurance claims
• Renters insurance claims 
• Homeowners insurance claims 

Let us now look into the details of the abovementioned insurance claims. 

Health Insurance Claims

Surgery costs, or the cost of staying in a hospital, are relatively high. A health insurance claim helps the beneficiary or anyone related to them by providing them with financial support so that they do not have to deal with crippling economic damage. 

Property And Casualty Claims

A house, no doubt, is the biggest asset that an individual can invest in their whole life. A claim filed for damage from the covered danger is initially routed through Internet to a representation of an insurer. These individuals are most commonly referred to as a claims adjuster. 

Life Insurance Claims

In order to get the life insurance claim, you would have to provide the insurer with the claim form, the death certificate, and sometimes, the original policy as well. The process related to larger face value policies especially will require an in-depth examination by the insurance carrier to make sure that the death of the insurer has not fallen under the contract exclusion or that the person has not expired due to an act of crime. 

Car Insurance Claims

A car insurance claim may be paid out in multiple different cases. This could include an accident or a collision with another car or any other vehicle, person, or property and any damage to the property or any bodily harm of any kind. Comprehensive damage that may have happened due to an outside force is also inclusive of a car insurance claim. 

Renters Insurance Claims

A rental insurance claim serves for incidents concerning rental properties. This may include: 

• A theft from your house or vehicle
• Damage to personal property 
• Injuries to people while they are living in your rental property 
• Damage caused by any natural disasters or any other unpredicted circumstances 

Homeowners Insurance Claims

A homeowners insurance claim generally covers a number of scenarios that are related to your home or personal property. This may include: 

• Any type of structural damage 
• Injuries to visitors while they are inside your house
• Damage caused to personal property, which may also include theft
• Any additional living expense in case your house becomes inhabitable. In that case you need to stay at an outside accommodation for a given time period. 

Process Of An Insurance Claim 

With multiple insurance claim policies available everywhere, you might as well wonder what process goes behind an insurance claim.

Well, in that case, here is the process of an insurance claim: 

• Disclosing to the insurer 
• Claim the inquiry by the adjuster 
• Deciding on the coverage 
• Servicing and renewal 
• Claiming the settlement

Read More: Insurance Underwriter: How To Become One & What Underwriters Do?

Wrapping Up 

With the uncertainties of life, you never know when you are in need of an insurance claim. However, as easy as they may seem, there is a lot to understand about an insurance claim. 

The types, the rules, and the rate hikes are quite uncalled for. So, it is always better to have a talk with a professional before you make an insurance claim so that you get the details and knowledge about the insurance claim and do not end up making any unwanted mistakes.

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