Decoding Policy Jargon: The Claims Process
Every insurance company has its own way of handling a claim. When you signed your policy, your independent insurance agent probably sent you information about this. That may have been a while ago, and not every situation merits making a claim.
If you’re not sure when to make an insurance claim, you’re not alone. Understanding your policy and the process can help, but your agent is your biggest ally.
Deciding whether to file a claim
Before you call your insurance company’s direct claims line, call your agent. Remember, your agent isn’t employed by the insurance company that holds your policy. If you call the insurance company’s direct number, they could record the details of your call and reference them later.
Your agent’s employer is the insurance agency, which is a separate entity from the insurance company. Independent agents work in your best interests. Their knowledge is an asset when you’re faced with possibly filing a claim.
A word on whether to file a claim
It makes sense to file a claim when there’s significant damage or liability involved, such as wind damage from a tornado or a dog bite.
Deciding whether to submit a claim gets tricky when the damage is minor or no liability is involved. For example, let’s say you have a small kitchen fire that causes cosmetic damage to the wall. The cost of repairing it is $2,500. Your deductible is $1,500. It might be better to pay the entire amount yourself to keep the claim off your insurance record.
Your agent will help you decide whether to file a claim and advise you on your rights.
An overview of the claims process
Insurance companies have their own claims departments, each with its own procedures. There’s no single process across all companies, but there are commonalities.
Here’s an overview of what to expect:
Report the incident, damage or loss
After you have an accident or loss, report it. This report is called the first notice of loss (FNOL).
- If you call your agent to discuss whether to file, this is not the FNOL.
- If you call your insurance company to report a claim, this is the FNOL.
Policy verification
Your insurance agent or company will verify your policy’s coverage. If you’ve consulted with your agent first, they’ll tell you about your limits and deductible (how much you have to pay out of pocket). They’ll also advise you on whether to file a claim. If you decide to do so, your insurance company will also review this information with you. But remember, just because you file a claim with your insurance company doesn’t mean it will result in a payout. They may need to investigate before they decide.
Documentation of the claim
You'll need to provide details about the claim event. Document the incident with pictures, videos, receipts, expenses, witnesses and any other evidence. Your insurance company might require you to make a sworn statement, your legal testimony about what happened. Making a claim is like building a case for yourself. Treat it like you would your testimony in a court case.
Don’t lie or inflate damages, as this could be considered fraud. Don’t offer information beyond what they ask of you. Make your answers short, preferably yes or no, and to the point. Everything you write or say will be documented and used by the insurance company to decide on your claim. They could decide for or against you. They are not there to advocate for you. They are there to figure out what happened and decide whether it’s covered.
Investigation and evaluation
Once the claim has been submitted, the insurance company will assign a claims adjuster. The adjuster will investigate the incident using interviews and site visits. They will also review evidence like medical reports, repair bills, videos, photos, and sworn statements.
The claims adjuster works for the insurance company, acting as their eyes and ears. Claims adjusters are licensed insurance professionals who are familiar with claims, how damage occurs, and the signs to look for.
Claim approval or denial
Based on the evidence and the policy coverage, the claims adjuster will decide whether to approve or deny your claim. If they approve it, they’ll determine how much you will receive for your loss. If you agree that the amount is fair, you can proceed with the disbursement of funds. If you disagree on the amount, your claim will move to dispute resolution.
Disbursement of funds
After your claim has been approved and you’ve agreed to the settlement amount, the insurance company will pay you the funds or send you to a repair service provider directly. The amount they pay is the total cost minus your deductible. For example, let’s say your car is damaged in an accident. The insurance company approves the repairs and the shop fixes your car. When you come to pick up your car, the auto shop shows you a receipt that includes:
- A detailed description of the repairs
- The total cost of the repairs
- The amount the insurance company has agreed to pay
- The amount you’re responsible for
If the cost of the repairs is $9,500 and your auto insurance deductible is $500, you pay $500 and the insurance company pays $9,000.
Dispute resolution
If you disagree with the claim settlement amount or if the claim is denied, there’s a dispute resolution process. Don’t sign anything. Instead, hire a licensed public adjuster to help with your claim. Public adjusters work for you, not the insurance company. You have the right to hire an insurance claim attorney or a public adjuster at any time during the claims process.
Claim closure
If there is no dispute and the claim payment has been made, your claim is closed.
Call your agent for help deciding on a claim
Every claim is different. Call your agent if you need help deciding whether and how to file a claim. Some claims should obviously be filed, like property damage due to severe weather. But even if you know you’re submitting a claim, inform your agent. They can guide you through the process.