Insurance Claim – Definition, How it Works, Process, and Types

Definition of Insurance Claim

An Insurance Claim is a formal request by the Policyholder requesting for compensation from a covered loss in the Insurance Policy. The Insurance Company reviews the Insurance Policy and pays the Claim is paid to the Policyholder if the Claim is found to be admissible. Insurance Claims Administration and Processing is one of the most critical functions of an Insurance Company.

It is also important for the Policyholder to understand how an Insurance Claim works so that he can avail compensation in case of damage to the Insured Asset.

This article will discuss how an Insurance Claim works, Types of Insurance Claims and the Insurance Claims Process.

How an Insurance Claim Works?

An Insurance Policy protects the Insured against the financial losses because of covered events. The Insured Party has to pay an Insurance Premium to avail protection against the losses.

So, when an Insured Party suffers a financial loss because of a covered event, he intimates the loss to the Insurance Company. The Insurance Company examines the circumstances and nature of the loss and pays compensation to the Insured Party if the Claim is found to be admissible.

Types of Insurance Claims

Insurance Claims come in many forms. It depends on the Insured’s Policy Coverage and the nature of incident. Various types of Insurance Claims are listed below:

Health Insurance Claims

A Health Insurance Policy will pay for the hospitalisation expenses, surgery expenses, doctor’ charges and medicine expenses.

There are 2 ways Health Insurance Claims are settled:

1. Cashless Claim Settlement Process: In a Cashless Claim Settlement Process, the Insured gets hospitalised for treatment at a Network Hospital and shows the Mediclaim E-Card to the Insurance Department of the hospital. The Insurance Company then settles the bill directly with the Hospital.
2. Reimbursement Claims Settlement Process: in a Reimbursement Claim Process, the Insurance Company reimburses the Insured for the hospitalisation expenses after he submits the necessary documentation.

Car Insurance Claim

There are 2 types of Car Insurance Claims or Motor Insurance Claims:

1. Own Damage Claim in Car Insurance relates to the damage of Insured’s Vehicle because of an accident. The Car Insurance Policy reimburses the Insured for the costs to repair the damage to the vehicle.
2. Third Party Liability Claim in Car Insurance relates to a Bodily Injury or Property Damage caused to the Third Party by the Insured’s Vehicle. In case of a Third-Party Liability Claim, it is necessary to inform the Police as well as the Insurance Company about the accident.

A Car Insurance Policy provides coverage for incidents like Accidents to vehicles,

Fire Insurance Claim

A Fire Insurance Policy insures Property like Plant and Machinery, Buildings, Inventories etc. The Policy provides coverage for damage to Insured Assets on account of Fire and associated Perils. Additionally, the Fire Insurance Coverage can be extended to provide coverage against natural calamities like earthquakes, storms, tempest, floods, inundation etc.

In case of a Fire Insurance Claim, the Insured must intimate the Insurance Company about the accident immediately. The Insurance Company will appoint a surveyor who will investigate the nature and extent of the damage. The Insurance Company settles the claim once the Insured submits the required documents.

Life Insurance Claims

A Life Insurance Policy pays out the Sum Assured under the Policy to the Beneficiary upon the Death of the Insured Person. Life Insurance Claim requires the Beneficiary to submit the Death Certificate, Claim Form and the Policy to the Insurance Company.

It is necessary that the Insured reviews the Insurance Policy to understand what is covered for each type of Claim to ensure maximum chances of recovery in case of a Claim.

How to File an Insurance Claim?

A Concise Guide to an Insurance Claim Process

The Insured should follow below mentioned steps to file an Insurance Claim:

1. Intimate the Insurance Company: The Insured should intimate the Insurance Company about the damage as soon as possible.
2. Appointment of the Surveyor: The Insurance Company appoints a Surveyor to investigate the nature, extent and reason of damage. The Surveyor submits a report to the Insurance Company within 30 days after appointment.
3. Submit Documents: The Insured should submit the required documents such as Policy Copy, Claim Form, Financial Documents alongwith any evidence to support the Claim.to the Insurance Company.
4. Claim Settlement: Upon receipt of the required documents and the survey report, the Insurance Company makes the claim settlement offer to the Insured within a period of 30 days. IF the Insured accepts the claim settlement offer, the Insurance Company has to make a payment of claim amount to the Insured within a period of 7 days. If the Insured rejects the claim settlement offer, he should intimate to the Insurance Company in writing.

Providing appropriate documents on an expedited basis will ensure a quick settlement of the claim.

Will my Insurance Premium Increase if I file an Insurance Claim?

The prior Claims History of the Insured definitely impacts the Insurance Premium amount charged by the Insurance Company. In general, Insurance Premiums will increase for Motor Insurance and Fire Insurance if an Insured files a Claim under the Policy.

Individual Health Insurance and Life Insurance are products where the Tariffs are regulated by IRDAI. Here, the prior claims experience do not normally impact Insurance Premiums.

Conclusion

Good Communication is key aspect for a smooth claims experience. The Insured should report accidents promptly and provide accurate documentation as well as keep records of all exchanges, and follow up regularly.

Before making any claims, review your Insurance Policy for coverage limits, exclusions, deductibles, and other details. This will help you understand which losses are eligible for compensation. Overall, understanding insurance claims helps policyholders better manage unexpected events.

Additionally, there are experienced Insurance Brokers who can assist you with the entire claims process. It can be a wise decision to take their help as well.

Qian is an experienced Insurance Broker. If you have any questions regarding your Insurance Policy or Insurance Claim, you can email us at insurance@qian.co.in or call us on 022-22044989.

We would be glad to assist you!