Filling for an insurance claim is sometimes tricky. The best way to up your chances of a favorable outcome is to learn the steps involved and how you can cut through the red tape.
In this post, we’ll discuss:
- How you should go about filing a claim: home, auto, life, or business;
- Mistakes claimants make in the process that sabotages their chances;
- And how you can safeguard your interest from bad faith tactics.
These general tips apply right across the board, no matter the type of insurance. For company-based requirements, always reference your policy for guidance.
I | What is an Insurance Claim?
An insurance claim is a formal request filed by you to your insurer to receive a monetary disbursement in the event of a disaster. You can use this money to help with repairs, replacement, additional living expenses, and other named expenses mentioned in your policy.
After receiving your application, your insurance company will pass your case to an insurance adjuster to investigate the circumstances noted. It’s how they weed out fraudulent requests and determine whether or not you qualify for compensation and how much.
Millions of insured customers file each year. The industry would collapse if insurance companies stamped ‘approved’ on all their applications. Knowing how to file a valid claim will give you an edge.
But do you need to file a claim?
Determining if you need to file a claim will save you time and the headache associated with the process. Let’s look at one instance when it doesn’t make any sense.
Scenario: Suppose the final cost of replacement or repair is lower than your deductible.
Amounts lower than your deductible disqualify you for a payout. Your deductible is the amount you spend out of pocket before your policy chips in for the rest.
Say you have a $1000 deductible on your home insurance. If the total cost of the damage is $1200, does it make sense to file for a $200 payout? Furthermore, is it a financially savvy move when you put this money in the context of an increase in your premiums?
When you’re buying a policy, set a reasonable deductible. Otherwise, you’re looking at a hefty upfront bill. On the flip side, frivolous requests can trigger an increase in your monthly insurance premiums you’ll regret.
When should I apply for a payout?
There are no hard and fast rules about when you should file for a claim. When you Google this question, you’ll find general rules of thumb.
- When the cost of repairs is considerably higher than your deductible: Your insurance is there to handle the big stuff. The debt-inducing emergencies you can’t manage on your own. It’s why you signed the agreement in the first place.
- When you or someone else suffers any serious injuries: Bodily injuries mean medical bills, which aren’t cheap. Depending on the provisions in your policy, your compensation should cover the cost of aid for you and affected third parties and, if applicable, lost wages for the time you’re unable to work.
- When the at-fault blame is iffy: Insurance companies have a knack for investigating. Never admit to being at fault. Allow your respective insurers and the police to do the digging and cast the final judgment.
Ask yourself if applying for a payout is a wise financial decision by weighing the pros versus the cons.
II | How to File an Insurance Claim With Your Insurance Company
So now that we’ve established the when of filing, it’s time for the how. How you should initiate the process and what you’ll need beforehand.
Step 1: Report the matter to the police.
Including a copy of the police report can speed up the claims process. If the police don’t show up, report the matter in person as soon as possible. For car accidents, some states require an official police report depending on the magnitude of the accident.
Step 2: Document the damages and exchange contact information with affected third parties.
Document the damages caused by the disaster or accident with videos and photographs. Your adjuster will ask for documentation supporting your filing to the company for compensation.
Keep thorough and organized records of everything related to the situation. Collect the names and numbers of everyone involved, both witnesses and affected parties. If you’re involved in a car accident, ask the other driver(s) for their license, vehicle registration, and insurance ID card. Include the make and model of their vehicles as well.
Collate receipts and bills for expenses for later reimbursement from your insurer, if applicable.
Step 3: Contact your insurance company immediately to report accidents or damages.
Get in touch with your insurance agent immediately and report the incident. Many insurance companies offer apps that allow you to file a claim anywhere. Some even allow you to monitor the progress and status of your request via their app.
Find out whether or not your policy covers the damages you’ve reported. It saves you time starting a lengthy insurance claim process for uncovered events.
What other benefits does your policy afford you? Does your policy pay for a rental vehicle if you’re in an auto accident? Roadside assistance?
Every insurance company approaches its claims process differently. Ensure you understand the steps required to reduce the chance of claim issues.
Step 4: Collect and complete all necessary claim forms.
Each insurance policy requires a specific “proof of claim” form. Ask your insurance agent to forward or direct you to where you can obtain the necessary documents. Enquire, too, about additional paperwork you’ll need to provide.
While you’re at it, ask for critical claim deadlines and mark them on your calendar. The last thing you want is for your insurer to use ‘you missed the deadline’ against you. It’s a loophole often used by bad faith insurers to avoid paying out claims.
III | Mistakes to Avoid in the Claims Process
Covering your bases keeps you on the right side of the claims process. But even so, there might be mistakes you’ve never considered until it’s used against your favor later on.
1. Saying too much
If you’re chatty, your insurer will love you. And not for the right reasons.
When you phone your agent or do an interview with a claims professional, they document everything you say on their end. They’ll ask you loaded questions making friendly conversation, but they’re searching for tiny details they can twist out of context. It’s part of their training.
Stick with the facts when asked questions. Answer honestly, but don’t go veering off into answering unasked questions. You’re not chatting it up with friends; you’re in the middle of a business negotiation. Your claim is on the line. One minor slip of the tongue might lead to the denial of your application.
Cooperate with your insurer, but be mindful of how they may twist what you do or say.
2. You don’t file soon enough
Setting aside any deadlines, the longer you take to make the report, you might forget things—essential details about the circumstances leading to the disaster.
3. You don’t keep records of communication
Phoning your agent may be simpler, but it doesn’t leave a paper trail. If there are claim disputes, whoever you spoke to could say they didn’t say what you thought they did or didn’t mean it as you understood it. When it’s your word against the company’s agents, you’re the outsider and the one less likely to be believed.
Correspond by email as much as possible. Each mail you send is time and date stamped. In instances where your insurer doesn’t get back to you or say they never got your email, you have proof of delivery and sometimes receipt, depending on your email settings.
Not all insurance companies will give you the run-around, but there are some bad apples.
4. Filing when you don’t have to
Filing a minor claim is more trouble than it’s worth. Do the math and weigh if the impact on your premium justifies the payout cost. Some claims are better paid out of pocket.
Conclusion
Successfully filing an insurance claim starts with you.
- Understand what your policy does and doesn’t cover. You can’t file a claim for disasters not listed. You set your perimeters when you sign up for an insurance policy.
- Don’t report claims before first asking yourself if it’s something you need to do. This point also takes into account your policy provisions. Your deductible and coverage limits should be the first factors considered.
- Insufficient documentation and not filing in time reduce your chances of approval. Check your policy conditions for required information, or get a list from your agent. It doesn’t matter if it’s for an auto insurance claim, home, business, etc., document the damages.
Once you’ve covered your bases and handed in your completed forms, it’s up to the insurer.
- Leave a paper trail of every communication you have with your insurer regarding your claim. Emails are the best way, but if you speak with someone on the phone, note their names, numbers, and the call date and time. Retain a copy of any postal mail you send as well.
