Loading the player...

What is an 'Insurance Claim'

An insurance claim is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. The insurance company reviews the claim for its validity and then pays out to the insured or requesting party (on behalf of the insured) once approved.

Insurance claims cover everything from death benefits on life insurance policies to routine health exams at your local doctor. In many cases, third parties file claims on behalf of the insured person, but usually only the person(s) listed on the policy is entitled to claims payment.

BREAKING DOWN 'Insurance Claim'

A paid insurance claim serves to indemnify a policyholder against financial loss. An individual or group pays premiums as consideration for completion of an insurance contract between the insured party and an insurance carrier. The most common insurance contracts revolve around costs for medical goods and services, physical damage or liability resulting from the operation of automobiles, property damage or liability from home ownership, and the loss of life.

Health Insurance Claims

Costs for a surgical procedures or inpatient hospital stays remain prohibitively expensive. In 2014, the average cost across the United States for a day in a hospital sat at $2,212. Individual or group health policies indemnify patients against financial burdens that may otherwise cause crippling financial damage. Health insurance claims filed with carriers by providers on behalf of policyholders require little effort from patients, as 94% of medical claims were adjudicated electronically in 2011, a 19% increase from 2006. Policyholders must file paper claims where medical providers do not participate in electronic transmittals but charges result from covered services rendered by professionals or facilities. Ultimately, an insurance claim protects an individual from the prospect of large financial burdens resulting from an accident or illness.

Property and Casualty Claims

A home is typically one of the largest assets an individual owns. A claim filed against damage from covered perils is initially routed via phone or the internet to a representative of an insurer, typically an agent or claims adjuster. Unlike health insurance claims, the onus is on the policyholder to report damage to a deeded property he owns. An adjuster, depending on the type of claim, inspects and assesses damage to property for reimbursement to the insured. Upon verification of the damage, the adjuster initiates the process of reimbursing the insured.

Life insurance Claims

Life insurance claims require the submission of a claim form accompanied by a death certificate. The process, especially when claims involve high face amounts, may require in-depth examination by a carrier to ensure that the death of the covered individual did not fall under any exclusion contained in the contract, such as suicide or death resulting from a criminal act. Generally, the process takes about 30 to 60 days without extenuating circumstances, affording beneficiaries the financial wherewithal to replace the income of the deceased or simply cover the burden of final expenses.

RELATED TERMS
  1. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  2. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  3. Insurance Proceeds

    The benefit proceeds paid out by any type of insurance policy ...
  4. Insurance

    A contract (policy) in which an individual or entity receives ...
  5. Adjuster

    An insurance claims agent. A claims adjuster is charged with ...
  6. Insurance Defense

    An attorney who specializes in cases relating to insurance.
Related Articles
  1. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  2. Insurance

    How To Invest In Insurance Companies

    Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment ...
  3. Insurance

    Life Insurance: How Long Does It Take To Get Paid?

    How to file for a life insurance payout – and how long it takes to receive it. Plus, new ways to plan for payments that provide an income stream.
  4. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about insurance to protect their residence.
  5. Insurance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  6. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  7. Financial Advisor

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
  8. Tech

    How Big Data Has Changed Insurance

    No longer confined to technology, big data has become integral to providing solutions to the insurance industry's long standing challenges.
  9. Insurance

    Will Filing An Insurance Claim Raise Your Rates?

    An accident can mean higher insurance costs - even if it wasn't your fault.
RELATED FAQS
  1. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  2. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
  3. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  4. What is the difference between the death benefit and cash value of an insurance policy?

    Understand the difference between the various components of a life insurance policy including the death benefit and a policy's ... Read Answer >>
  5. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
  6. How does the insurance sector work?

    Learn more about the insurance sector, a historically safe place for equity investors and the home of some of the largest ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  3. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  4. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  5. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  6. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
Trading Center