What Is an Insurance Claim?

What Is an Insurance Claim?

An insurance claim is a request that a policyholder files asking their insurance company to pay for a covered loss. Filing an insurance claim usually involves completing a claim form and providing documentation of the loss or expense. For instance, you might provide a police report and photos of damage after a car accident, or a receipt and itemized bill for an insurance claim.

The insurance company reviews your claim and decides whether to approve or deny it. If your claim is approved, the insurer issues payment, minus any deductible or copayment that you owe.

How Do Insurance Claims Work?

Insurance policies help protect you from financial risk, such as the risk that your car will be damaged in an accident and you'll have to pay for repairs. When an event covered in your policy occurs, such as your house burning down, you must file a claim to receive payment from your insurance company.

Depending on the type of insurance, you may be responsible for paying a deductible when you make an insurance claim.

• Auto insurance deductibles are typically a flat dollar amount. If you file an auto insurance claim for $2,000 worth of damages and your deductible is $500, for example, the insurance will pay out $1,500 ($2,000 minus the deductible).
• Homeowners insurance deductibles may be a flat dollar amount or a percentage of your home's insured value. For instance, if your home is insured for $300,000 and you have a 2% deductible, your deductible would be $6,000. Some types of coverage have higher deductibles; when you file a claim for a natural disaster such as an earthquake, flood or hurricane, there may be a deductible of up to 25%.
• Health insurance deductibles, which some plans have, require you to pay for covered health care or prescriptions out of pocket until you reach the annual deductible amount. After the health insurance deductible is met, insurance covers all your costs for the rest of the year. Some services, such as preventive or prenatal care, may be covered without having to meet your deductible.
• Pet insurance deductibles work similarly to health insurance deductibles. Once you meet your deductible, which typically ranges from $0 to $1,000, pet insurance covers part of the bill—generally between 70% and 90%—up to the limits of your coverage.

Learn more: What Is a Deductible?

Types of Insurance Claims

You'll typically make an insurance claim in the following situations.

• Auto insurance: Depending on what kind of car insurance coverage you have, you might file an auto insurance claim if your car is damaged in a collision or by a natural disaster, if you're in a car accident that injures you or another person, if your car damages someone's property or if it's stolen.
• Homeowners insurance: You'd typically make a home insurance claim if your home is damaged by a fire, windstorm, lightning or hail; if your home is burglarized or vandalized; or a visitor to your home is injured on your property. If you purchase coverage for floods, earthquakes, landslides, sinkholes or sewer backups, you can file claims when these issues occur.
• Renters insurance: As with home insurance, you might file a renters insurance claim if your personal property is damaged or stolen, or if a visitor to your home is injured. You can also file a claim to cover the cost of living elsewhere if your rental unit is uninhabitable during repairs.
• Health insurance: A health insurance claim should be filed when you receive covered health care, fill a prescription for medication, visit a provider or get other medical services covered by your policy. With health insurance, the provider typically files the insurance claim on your behalf, but this isn't always the case.
• Pet insurance: You might file a pet insurance claim when your pet receives care for a covered accident or illness, such as being hit by a car or having an ear infection. Some pet insurance plans also cover a portion of costs for wellness care, such as annual vet exams, vaccinations and dental cleanings.
• Life insurance: When a person who has a life insurance policy dies, the policy's beneficiary must file a claim with the insurance company to receive the payout (also called the death benefit).

Tip: Floods, earthquakes, landslides, sinkholes and sewer backups aren't covered by standard home insurance, but if you purchase special coverage for these risks, you can file claims if they occur.

How Long Do I Have to File a Claim?

In general, it's best to file a claim as soon as possible; this will speed up the process of getting your claim resolved. However, typical time limits for filing a claim are:

• Auto insurance: Time limits for filing a claim can range from one year to six years, and may vary for bodily injury or property damage.
• Home insurance: You can generally file a claim up to one year after the damage occurred.
• Renters insurance: Claims must usually be filed within 48 to 72 hours.
• Health insurance: Many plans require filing a claim within 90 days of receiving care.
• Pet insurance: You may need to file a claim within 90 to 180 days of treatment.
• Life insurance: There's no time limit for filing a life insurance claim.

Time limits for filing a claim can vary depending on your state laws and your insurance policy. Check policy details or contact your insurance company to see how long you have to file a claim.

How to File an Insurance Claim

Here's how to file the most common types of insurance claims.

How to File an Auto Insurance Claim

1. Notify the police. If you're involved in a car accident with another party, always call the police so they can file a report. A police report is often required when you file a car insurance claim. It can also help determine whose fault the accident was, providing useful evidence if you're sued by the other driver.
2. Gather information. Collect the names, contact information, insurance information and ID numbers of other people involved in the accident, as well as names and contact information for any witnesses. Take photos or videos to document the scene of the accident and any damage to vehicles or property.
3. Contact your insurance company. File your claim as soon as possible; you can typically do this using the insurance company's app or website or by calling the company. You'll be assigned an insurance adjuster who can explain next steps and guide you through the claim process.

Learn more: How to File a Car Insurance Claim

How to File a Homeowners Insurance Claim

1. Contact the police if necessary. If a crime occurred, such as burglary or vandalism, you'll generally need a police report to file a claim.
2. Submit your claim. Call the insurance company or use their app or website to start the claims process. The representative will guide you through the steps involved.
3. Document the damage. Take photos or videos of the damage to your home and possessions. An insurance adjuster may visit to inspect the damage in person; avoid discarding items or debris until then.
4. Detail your losses. If you need to repair or replace personal possessions, such as furniture or clothing, look for receipts, home inventories, photos or other proof of their value. You'll typically need to provide a list of items to get reimbursed. If you make essential repairs to prevent further damage, keep receipts for the cost of materials, labor and equipment.
5. Gather estimates. Requesting estimates from local contractors can help the insurance company calculate the cost of repairs to your home.

Tip: The claims process for renters insurance is the same as for homeowners insurance, except your landlord is responsible for repairs to the property. Contact the landlord right away to inform them of the damage.

Learn more: How to File a Home Insurance Claim

How to File a Health Insurance Claim

Often, the medical provider or pharmacy submits your health insurance claim themselves. In this case, all you need to do is give the provider your insurance information and make any payments due, such as a copay. The insurance company will process the claim and pay the health care provider directly.

If you're responsible for filing health insurance claims yourself, here's what to do:

1. Pay upfront, if necessary. You may need to pay for health care or medications at the time of service and receive reimbursement from your health insurance.
2. Get receipts and an itemized bill. The bill should include the date of service, services provided and the amount the provider charged. There may be more information, such as a procedure code.
3. Complete and submit a claim form. You can usually get a claim form from your health insurer's website. Fill out the form, indicating whether payment goes to you or to the provider, and include any required documentation. Submit claims as soon as possible; there may be a time limit for filing claims.

Tip: Understanding what your health insurance covers before getting health care can help prevent unexpected bills.

How to File a Pet Insurance Claim

1. Submit your claim. You can usually do this using the insurance company's app or website, or by email, fax or mail.
2. Share supporting documentation. Most policies require submitting an itemized invoice and a copy of your receipt. You may also need to provide the vet's medical notes.

How to File a Life Insurance Claim

1. Find the life insurance policy. You may be able to find a life insurance policy in the deceased's paperwork or safe deposit box, or by contacting their attorney, employer or financial planner. You can also keep an eye on their mail or email to see if any life insurance statements or bills arrive.
2. Contact the insurance company. The insurer that issued the policy will explain how to file a life insurance claim; it generally requires submitting a certified copy of the person's death certificate.
3. Wait for your claim to be approved. This can take anywhere from a few days to a few months after submitting your claim.

Learn more: Checklist: What to Do When a Loved One Dies

How Will My Insurance Claim Be Paid?

Once you've paid or met any applicable deductible, how your insurance claim will be paid depends on a variety of factors, including your policy type, your insurance company, state laws and whether you have a mortgage or auto loan. In general, however, here's what to expect.

How Auto Insurance Claims Are Paid

If your car needs repairs, your insurer may send payment directly to you, directly to the repair shop or make a check out to both you and the repair shop. If your totaled car was financed, the insurance payout will first go towards paying off the loan; any remaining amount will be paid to you.

How Homeowners Insurance Claims Are Paid

You may get separate payments for repairing your home, replacing personal property and paying additional living expenses (ALE) if you have to live elsewhere while your home is repaired. If you have a mortgage, payment for repairs may be made in both your name and the lender's name or may go directly to the lender, who will hold it in an escrow account and release money for repairs as needed.

If you're replacing personal belongings, you'll initially get a payment for the current cash value of the items. Some homeowners insurance includes replacement cost coverage, which pays to replace old items with comparable new ones. In this case, you'll generally have to buy the replacement items, submit receipts to the insurance company, and be reimbursed for the difference between the old item's cash value and the replacement item's cost.

How Health Insurance Claims Are Paid

State laws govern how long health insurance companies have to approve or deny a claim. Once the insurance company has made a decision, you'll receive an explanation of benefits (EOB) document that shows whether your claim was approved, how much the insurer paid and how much (if anything) may be your responsibility. The health insurance carrier may pay you directly or may pay the provider, depending on your plan. In some cases, they'll pay you, and you'll then need to pay the provider.

How Pet Insurance Claims Are Paid

Pet insurance usually requires you to pay the veterinarian upfront and get reimbursed for covered services. You can typically opt to receive payment by direct deposit or check. Any deductibles or coinsurance payments will be subtracted from your reimbursement.

How Life Insurance Claims Are Paid

The beneficiary of a life insurance policy can usually choose to receive the life insurance settlement as a lump sum, in installment payments, as an annuity or as a retained asset account. Each option has its own tax and financial implications, which you should understand before making this important decision.

Learn more: What Is a Beneficiary?

How Can Making a Claim Affect Your Policies and Premiums?

Filing a claim may or may not affect your policy premiums depending on your insurance company, the type of insurance and the specifics of the claim.

For example, how an auto insurance claim impacts your premiums depends on things like the claim amount, your driving record, your claim history and whether you're at fault. Multiple home insurance claims in a seven-year period—even if you didn't own your home at the time—could hike your insurance premiums.

At the least, filing a home or car insurance claim will cost you any discount you enjoy for being claim-free. If the cost of auto or home repairs isn't significantly more than your deductible, it may make more sense to pay for repairs out of pocket than to risk a rate increase by filing a claim.

Health insurance works differently. The Affordable Care Act prohibits insurers from raising your rates based on your health. Any rate increases must be based on the overall "risk pool" you belong to. Every year, health insurance companies predict how much the cost of care for different risk pools will change in the coming year and base premiums on those calculations. If you're a 33-year-old woman and your health insurance company estimates that costs for women ages 30 to 35 will rise next year, your premiums will likely rise whether you filed one claim or 100.

Learn more: What Factors Affect Car Insurance Rates?

Frequently Asked Questions

The Bottom Line

If your insurance premiums rise after you file a claim, try shopping around for lower premiums. Improving your credit might help you save too. Home insurance, renters insurance and auto insurance providers in most states can consider credit-based insurance scores when setting your premiums; higher scores can mean lower rates.

These aren't the same credit scores lenders use, but since both types of scores use data from your credit report, improving your consumer credit score could positively impact your credit-based insurance score. You can check your FICO^® Score^Θ from Experian for free to see whether your credit score can benefit from a boost.