Loading the player...

What is 'Insurance Claim'

An insurance claim is a formal request to an insurance company for coverage or compensation for a covered loss or policy event. The insurance company validates the claim and, once approved, issues payment to the insured or an approved interested party on behalf of the insured.

Insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams. 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 claim payments.

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 claims involve costs for medical goods and services, physical damage and liability resulting from the operation of automobiles, property damage and liability for dwellings (homeowners, landlords, and renters), and the loss of life.

Health Insurance Claims

Costs for a surgical procedures or inpatient hospital stays remain prohibitively expensive. In 2014, the US average cost for a one day hospital stay was $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; 94% of medical claims were adjudicated electronically in 2011, a 19% increase from 2006. Policyholders must file paper claims when medical providers do not participate in electronic transmittals but charges result from rendered covered services. 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 house is typically one of the largest assets an individual will purchase in his/her lifetime. A claim filed for damage from covered perils is initially routed via phone or the internet to a representative of an insurer, commonly referred to as an agent or claims adjuster. Unlike health insurance claims, the onus is on the policyholder to report damage of a deeded property he owns. An adjuster, depending on the type of claim, inspects and assesses damage to property for payment to the insured. Upon verification of the damage, the adjuster initiates the process of compensating or reimbursing the insured.

Life insurance Claims

Life insurance claims require the submission of a claim form, a death certificate, and oftentimes the original policy. The process, especially for large face value policies, may require in-depth examination by the carrier to ensure that the death of the insured did not fall under a contract exclusion, such as suicide (usually excluded for the first few years after policy inception) or death resulting from a criminal act. Generally, the process takes approximately 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. Insurance

    Insurance is a contract (policy) in which an insurer indemnifies ...
  2. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  3. Insurance Proceeds

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

    A protection against the loss of income that would result if ...
  5. Loss Cost

    Loss cost is the amount of money that an insurer has to pay in ...
  6. Ultimate Net Loss

    A party's total financial obligation when an insured event occurs. ...
Related Articles
  1. 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.
  2. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  4. Insurance

    Will Filing An Insurance Claim Raise Your Rates?

    An accident can mean higher insurance costs, even if it wasn't your fault. Depending on the extent of the damage, you may not want to file a claim.
  5. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  6. Financial Advisor

    Buying a Life Insurance Policy? Read This First

    Knowing who needs life insurance, how it works and the different types of insurance can help consumers make informed decisions about this product.
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. How are open market operations and monetary policy related?

    Understand the meaning of an aggregate limit in an insurance policy as well as which types of insurance companies are most ... Read Answer >>
Hot Definitions
  1. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, ...
  2. Moving Average - MA

    A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out ...
  3. Stop Order

    A stop order is an order to buy or sell a security when its price increases past a particular point in order to limit losses ...
  4. Inflation

    The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of ...
  5. Candlestick

    A chart that displays the high, low, opening and closing prices for a security for a single day. The wide part of the candlestick ...
  6. Indicator

    Indicators are statistics used to measure current conditions as well as to forecast financial or economic trends.
Trading Center