Definition of Insurance Claim in Business Insurance

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Insurance Claim

Insured individuals and groups don’t receive automatic compensation for car accidents, home repairs, or medical procedures. For them to receive compensation or coverage for these types of events, they need to file a claim with their insurer.

This is a formal request that asks their insurance company for assistance. It’s not done with hopes of getting compensation or coverage. Rather, the claim activates items addressed in their policy. Once it’s submitted, it is either approved or denied by the insurer. If the former occurs, the company enacts the coverage or pays a cash amount equivalent to the need.

For the most part, the only party that can file an insurance claim is the one listed on the policy. However, there are designated third-parties who can also file claims on behalf of the insured. For instance, a doctor will file a claim with the patient’s health insurance to recoup the costs of treatment.

Claims are reviewed by several groups. One is the claims adjuster. Their goal is to investigate insurance claims, mostly with auto accidents and property damage. They interview the person who filed the claim, review police and hospital records, and inspect the damage to the vehicle. If they feel the claim has merit, they’ll request it be paid out.

How Is a Claim Filed?

The policyholder files a claim through their insurer. Usually, this is in the form of a phone call or the completion of an online form. When they file a claim, the insured has to include several pieces of information. For instance, the date and time when the issue occurred, who was involved, and what was damaged.

When it comes to medical insurance, claims rarely have to be filed with the company. Instead, the claims are filed at the time of an appointment or after a procedure. This minimizes the amount of stress put on an individual who is trying to recover.

Claims and Rate Hikes

The more claims filed by the insured, the greater the chance their monthly premiums will increase. This is particularly true in two circumstances.

First, you can expect a rate hike if the damage incurred was your fault. Second, your credit rating goes down. The reason rate increases happen in the latter circumstance is because of the increase in risk.

Thus, individuals may want to minimize the number of claims they make. For example, a fender bender that resulted in minor damage might not be worth a claim and a repair. The same thing can be said for hail damage to the vehicle’s exterior. By doing this, policyholders won’t see a huge increase in their rates if they get into an accident where the vehicle is deemed a total loss.