What is an insurance claim?
An insurance claim is a formal request that you, as a policyholder, make to your insurance provider for compensation for a loss or damage that is covered by your insurance policy. Additionally, for property damages or physical injuries, insurance claims might include liability claims, where the insured may be held responsible for causing harm to others.
What is the purpose of the insurance claim?
An insurance claim aims to help you get financial compensation from your insurance company, and cover your financial losses if a covered accident occurred, whether it's an automobile accident, property damage, medical expenses, or other covered incidents.
Your insurer should provide timely and appropriate compensation for every insured expense, repair, or loss.
What are the types of insurance claims?
The type of insurance claim you make depends on the nature of the accident and your insurance coverage.
- Motor insurance claims - These insurance claims involve accidents or damage to vehicles, including claims for automobile repairs, total loss, liability insurance for bodily injury or property damage caused to others, or claiming for medical expenses coverage resulting from a road accident.
- Health insurance claims - Health insurance claims are filed to reimburse medical expenses for treatments of accidents, critical illnesses and cancers, hospital stays, surgeries, prescription drugs, and other services.
- Property insurance claims - Property insurance covers losses related to residential or commercial properties. You can claim insurance for damages caused by events such as fires, theft, vandalism, natural disasters, or other covered accidents listed in your property insurance policy.
- Life insurance claims - In general, Life insurance claims are filed by beneficiaries after the policyholder's death to receive the death benefit specified in the insurance policy.
- Liability insurance claims - Liability insurance claims arise when you are legally responsible for causing harm or injury to another person or their property. These claims might include slips and falls at certain locations, product liability, professional negligence, or defamation.
- Travel insurance claims - Travel insurance claims cover financial losses from unexpected events during trips, such as personal accidents, including trip cancellations, lost luggage, and medical expenses.
To file an insurance claim, whether it is a medical expense, car accident, or property damage, understanding the steps on how to file an insurance claim is essential. This process is separated into steps:
- Step 1 - Review your insurance policy and check your sum insured, deductibles, lump sum payout or annuity, and any specific requirements or exclusions related to the type of insurance claim you intend to file. Also, check deadlines for reporting claims to your insurance provider.
- Step 2 - Gather all relevant information and evidence related to the accident. You may include photographs, videos, police reports, medical records, and invoices. The more detailed and organized your evidence, the stronger your insurance claim will be.
- Step 3 - Contact your insurance provider as soon as possible after the accident. Provide them with accurate information, including the date, time, location, and any other pertinent details. Follow their instructions regarding the next steps in the claims process.
- Step 4 - Complete your insurance claim forms or make a video claim online through an official application from your insurance provider. Take your time to complete these forms accurately, providing all requested information. Be honest and transparent while describing the incident and any damages or injuries suffered.
- Step 5 - Attach all supporting documentation to your insurance claim forms. This may include receipts, estimates, invoices, or medical reports. Make copies of all documents for your personal records and keep track of every communication with your insurance provider.
- Step 6 - Cooperate with the insurance claim adjuster if they were assigned to investigate your insurance claim. Provide them with any additional information they require promptly. Answer their questions truthfully and provide any further evidence if they request.
- Step 7 - Follow up on your insurance claim with your insurance provider and maintain regular communication throughout the claim process. Stay updated on the progress of your claim and inquire about any necessary actions from your side.
- Step 8 - Review the insurance claim settlement once your claim is processed. Assess whether it adequately covers your losses, damages, or medical expenses. Negotiate with your insurance provider or seek professional advice to ensure a fair settlement.
What happens after an insurance claim?
After you filled in and submitted the insurance claim, the post-claim period started and it usually includes these stages:
- Claim acknowledgment: once you've submitted an insurance claim, the insurance provider will acknowledge the submission. They will provide you with a claim number and assign a person to handle your case.
- Investigation: Your insurance provider will initiate an investigation to assess the validity of your insurance claim. To support your claim, the insurance provider may request additional information, such as police reports, photographs, or medical records. Additionally, depending on the nature of the insurance claim you make, an insurance claim adjuster from your insurer might inspect the damage, evaluate the extent of the injuries or check your past medical history.
- Coverage Evaluation: The insurer will review your insurance policy to determine the coverage limits of the sum insured and the applicable deductibles and exclusions. They will assess whether your insurance policy covers your submitted claims and evaluate your compensation.
- Claim Settlement: Once the investigation is complete, the insurance provider will make a decision regarding your claim. If approved, they will offer an amount based on their evaluation of the damages or injuries. You may need to provide additional documentation, such as repair estimates or medical bills, to finalize the insurance claim settlement.
- Payment Processing: The insurance provider will propose the payment settlement process once you accept the insurance claim settlement offer depending on the nature of the claim. The timeline for reimbursement varies depending on your insurer’s regulations.
- Repair or Recovery: If your insurance claim involves car damage, the insurance provider will suggest repair options or recommend network garages. In the case of health insurance, insurance providers may offer assistance with finding healthcare providers or facilitate direct payment to medical facilities.
- Claim Closure: After the insurance claim settlement is finalized and repairs or medical treatment is completed, your insurance claim will be closed, and your insurance provider will update its records accordingly.
Which is the common reason why insurance claims are rejected?
Insurance claims can be rejected for various reasons. Please keep in mind that every insurance claim is unique. However, there are some common reasons for claims to be denied, such as:
- Lack of coverage - Insurance claims may be rejected if you attempt to file a claim for an event not covered by your insurance policy. You must thoroughly review and understand the terms, conditions, and exclusions of your insurance policy to ensure you meet the requirements for making a claim.
- Policy exclusions - Insurance policies often list specific exclusions, which outline situations, illnesses or events that are not covered. If your claim falls under one of these exclusions, it will likely be rejected. For example, if you were involved in a car accident under the influence of alcohol, most likely, your auto insurance will not cover this type of claim.
- Failure to disclose information - Policyholders must provide accurate and complete information about themselves and the insured items when applying for insurance. If it is discovered that you failed to disclose relevant information or provided false information, the insurance provider may deny your claim.
- Failure to pay insurance premium - If you have not paid your insurance premiums on time or let your policy lapse, the insurer may deny your claim. It is important to keep your policy active by fulfilling the premium payment requirements.
- Delayed reporting - Insurance policies usually require prompt reporting of accidents, and if you fail to report an incident within the specified timeline, the insurance provider may deny your claim.
- Insufficient evidence - Insurance claims may be rejected if there is insufficient evidence to support. You must provide all necessary documentation, such as police reports, medical records, or proof of ownership, to substantiate your claim.
- Fraudulent activities - Insurance companies thoroughly investigate insurance claims to identify fraud. Your claim will likely be denied if there is evidence of fraudulent activities or intentional misrepresentation.
Why does insurance go up after a claim?
Filling a claim might increase your insurance premium because, statistically, you have higher risks of future claims, unless of course you are not the one at fault. Additionally, claims result in higher costs for insurance companies, so we recommend maintaining a good claims history.
How to avoid claim rejections?
To avoid insurance claim rejections, learn your insurance policy thoroughly, provide accurate information, promptly report incidents, maintain proper documentation, and follow the insurance policy’s terms and conditions. If your claim is denied and you believe it is valid, you can appeal the decision or seek guidance from your insurance provider or legal professionals.
Should I make a car insurance claim when I am not at fault?
If you were involved in a car accident when you were not at fault, filling the insurance claim is still recommended to get financial compensation under the coverage of the insured’s vehicle. Make sure to support your claim by gathering as much evidence as possible, including photographs, witness statements, and any other relevant documentation. Once you have reported the accident to your insurer, they will investigate liability. If the investigation confirms that you were not at fault, your insurance provider will pursue a claim against the third party who is at fault or the plaintiff.
Can an insurance claim be withdrawn?
Yes, an insurance claim can be withdrawn under certain circumstances. However, it strongly depends on the conditions of your insurance policy. One of the possible reasons you might want to withdraw an insurance claim is when your insurance premium increase will be higher than the payout from the occurred event. Another reason to withdraw an insurance claim if you made a mistake in claim submission or provided incorrect information.
Are insurance claim payments taxable?
The taxability of insurance claim payments depends on the claim itself. However, generally, insurance claim payments are not taxable as they represent compensation for financial losses. For example, if you receive a claim payout from your auto insurance provider for damages that occurred, that amount is generally not subject to income tax. Similarly, life insurance proceeds paid to beneficiaries upon the insured person's death are tax-free.
Where do insurance companies get money to pay claims?
Insurance companies get money to pay out insurance claims from different sources. The main resource of income for insurance providers comes from insurance premiums you and other policyholders pay.
Remember that the steps and timelines for your insurance claim may differ based on the type of insurance policy you have and the complexity of your case. It's important to remember the following when it comes to insurance claims;
- To maintain open and honest communication with your insurance provider.
- Follow all the steps throughout the claim process, and don't hesitate to seek professional advice if needed.
- Do not attempt insurance fraud. Honesty is the best policy for making a successful insurance claim
|Death benefit||Is an amount of money paid to you in case of an insured person's death.|
|Policy lapse||Terminating an insurance policy if you don’t pay the insurance premium in time.|
|Nature of claim||Characteristics of the event that led to an insurance claim, describing damages, losses, or liability.|
|Post-claim period||A time period after your insurance claim has been filled and resolved.|
|Culprit||A person responsible for causing an accident, damage, or loss.|