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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.

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