INSURANCE CLAIM : DEFINITION, CONCEPT, TYPES & PROCESS
An insurance claim is a formal request by a person to an insurance company for coverage or compensation for a covered loss or policy of anything. So, it is an important topic not only for CMA Inter or CA Inters but also for general people, as we insured most of our utilities and we also claim insurance somehow in our life. So, let’s dive in to the topic for comprehend knowledge about Insurance and Insurance Claim.
Table of Content:
- What is Insurance?
- What is Insurance Claim?
- Types of Insurance/Insurance Claim
- How to Claim Insurance?
- Process of Insurance Claim
WHAT IS INSURANCE?
Insurance is a kind of tool used as a protection from financial loss, the risk of a contingent or uncertain loss. An insurance company is an entity that provides insurance. An insurance company is also known as an insurance carrier or underwriter. Insured is a person or entity who buys. The insurer is supposed to compensate the insured in the event of a covered loss. The loss that may or may not be financial is reduced to financial terms. To claim the amount, the loss should take place in a known place, and from a known cause. For example, Fire, automobile accidents, and worker injuries meet the criterion of insurance policy if a person died due to the mentioned reasons. It covers day-to-day expenses like the mortgage amount while the insured can focus on his/her health and recovery. Every insurance policy has five parts: declarations, insuring agreements, definitions, exclusions, and conditions.
WHAT IS INSURANCE CLAIM?
An insurance claim is a formal request by an insured to an insurer or the insurance company to compensate for a loss covered in the insurance policy. On approval, the insurance company issues payment to the insured. The insurance policy may be taken by any third party on behalf of the insured although only the person(s) listed on the policy is entitled to claim payments. Insurance claims are of various types: First-party insurance claims, car insurance claims, health insurance claims, etc. An insurance premium amount charged by an insurance company must be sufficient for the company to pay claims in the future, pay its expenses while making reasonable profits but the amount should not be that much that it turns away customers.
TYPES OF INSURANCE CLAIM
- FIRST-PARTY INSURANCE CLAIM
First-party insurance describes an insurance policy purchased by an insured directly from an insurance company. An insured can submit a claim for payment or, in some cases, reimbursement, to their insurer if he experiences an illness or an insured piece of property gets damaged. If a person submits a claim under his or her insurance policy, it is considered first-party coverage. An insurance company dealing with that claim must treat the insurer in good faith.
- GENERAL INSURANCE CLAIM
Disputes may occur over misrepresentations made at the time of the policy’s sale, and/or the amount of coverage provided by the insurer, the amount of payment owed, and/or missed or late payments on the part of the insured.
- CAR INSURANCE CLAIM
Anyone who owns or drives a vehicle is required to carry some insurance policy. A person may carry state-minimum coverage or can pay additional premiums monthly to insure in this type of claim. If an insured claims the insurance after the car accident of any kind of loss associated with the vehicle covered under the insurance policy, the insurer has to cover the costs promptly. In case, the insurer or the insurance company reject or delay payment of claims, the insured parties may file a claim against them. Car accident claims including loss of value to the vehicle, personal injury, injury by the uninsured defendant, coverage for a rental car during the repair period, and reimbursement for property repairs all vital needs for low-income and middle-class car owners. However, even if a person can afford to pay for the loss incurred, insurance policy permits him not to pay the amount. Coverage is a way of protecting your financial future from the unexpected.
- HEALTH INSURANCE CLAIM
Costs of a health insurance claim are usually high but worth the price if a person becomes hospitalized in the event of a severe accident or illness and faces high medical bills. But the claim may be rejected if the insured engaged in risky or dangerous behavior that is not covered under the terms of the policy. So, it is important to understand the scope of your medications to avoid out-of-pocket expenses. However, if, an insurance company delays or denies payment, an insured individual may file a case against him. Health insurance claims include hospital stays, prescription medications, surgeries, and emergency medical care.
- HOME-OWNER CLAIM
Home-owners usually take this claim to protect themselves against financial loss due to property damage caused by wildfire, wind, tornadoes, natural disasters. In case of any damage to the property covered under the claim, an insured expects an insurance company to pay full value on the claim. However, if, an insurance company delays or denies payment or says the limits of the policy exclude coverage for the incurred losses, an insured individual may file a case against him. Types of Homeowner’s claims include damages due to forces of nature, theft, and damage caused by vandalism, land contamination, damages due to appliance failure, damage due to mold, and replacement due to appliance failure.
- NATURAL DISASTER CLAIM
Natural disaster claim protects the insured from damages caused by hurricanes, earthquakes, windstorms, and other natural disasters. These policies do not cover damage caused by floods or storm surges. This policy covers damages resulting from hurricanes, tornadoes, wind, and hail. The National Flood Insurance program pays for damage caused by flooding. Disputes may occur among the insured and the insurer regarding policy limits, replacement costs, physical damage, cost of repair damages. If an insurance company unfairly delays or denies a covered claim, an insured individual may file a case against him. Natural Disaster Claims include flood damage, hail damage, wildfire-related losses, tornado damage, hurricane damage, earthquake damage, Lightning strike and excessively strong winds.
Browse this video to know all about the Insurance Claim for Loss of Stock by Fire –
HOW TO CLAIM INSURANCE
A paid insurance claim protects a policyholder against financial loss. An individual or group pays to the insurance company, an amount known as insurance premium as consideration for completion of an insurance contract between the insured party and the insurance company. The most common insurance claims involve include car insurance claims, health insurance claims, natural disaster claims, etc. In the case of property and causality insurance policies, the number of insurance claims filed by the insured has a direct impact on the rates, regardless of the scope of an accident or who was at fault. File too many claims and the insurance company may not renew your policy or increase the rate. On the other hand, if you aren’t at fault, your rates may or may not increase. For example, getting hit from behind when your car is parked or having siding blow off your house during a storm are not your fault and may not result in an increase in rate, but this isn’t always the case. The rate also depends on the mitigating circumstances, such as the number of previous claims you have filed, the number of speeding tickets you have received, the frequency of natural disasters in your area (earthquakes, hurricanes, floods). A low credit rating can also lead to rates hike. Red flag items including dog bites, slip-and-fall personal injury claims, water damage may have a negative impact on your rates and on your insurer’s willingness to continue providing coverage.
PROCESS OF INSURANCE CLAIM
- The broker is given a detailed list of all the items that were damaged or lost, and any proofs includingany photos or videos to explain the circumstances. He then helpsan insured in claiming the amount.
The broker thendetermines the amount of loss or damages covered by the insurance policy. He will also identify any liable parties.
- After the investigation, the broker goes through your policyto find out what is and isn’t covered under the insurance policy, and provide information regarding any applicable deductibles that may apply to the case.
- The broker mayhire appraisers, engineers, or contractors to lend their expert advice and to accurately evaluate the extent of the damage. Once the evaluation is complete, he will provide the insured with a list of vendors who can help with repairs. However, it’s not mandatory to hire these vendors, but it can lead to time saving and provides the much-needed information.
- After repairs have been completed and lost or damaged items have been replaced, the broker will contact the insured regarding settlement of the claim and payment. The amount of time it takes to receive payment will depend on the complexity of the situation.
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