When you make an insurance claim, you have usually suffered some type of a loss or your property has sustained damage that is caused by one of the named perils insured by your insurance policy. Your insurance policy provides coverage and compensation to you for covered losses or the damages you sustain as a result of the claims process.
Having more insight about the insurance claim, how companies handle insurance claims and the methods by which you can file insurance claims can take the worry and guesswork out of the insurance claim process and empower you to get the money you deserve in a claim settlement.
Insurance Claims Process Overview
Depending on the type of insurance claim you are making, the process will be different. Home insurance and personal property insurance claims will involve meeting with adjusters, getting approvals for estimates, making repairs, or replacing items. Each of these steps can be frustrating and confusing if you don’t know what to expect.
Due to the complexity of insurance claims, miscommunication is a common occurrence when trying to get the information you need from your insurance company. This seems to hold especially true when you have a major claim for your home resulting from a disaster event. Help yourself by understanding how major disaster home insurance claims work.
The other aspect of claims is how a claim will be paid. You might have experienced a claims situation where it seems that one person got paid more than another for the same type of damage or loss. Many think this is because the other person has a better insurance company, but this is incorrect. The first thing that determines how much money you will get in a claim is the type of coverage and options you chose when you purchased your specific policy.
How Will a Claim Be Paid
Homeowner insurance offers several types of coverage. The one you have will have a significant impact on how much you get paid in a claim. Learn about choosing the best home insurance and coverages so you get the most money in a claim.
- Actual Cash Value Settlements: People who have an actual cash value basis of claims settlement will not receive enough money in a claim to replace the items they have lost. If your contents or building are insured on an actual cash value basis, then you will only get the depreciated value at the time of loss. As a basic example, assume your TV set is a few years old, and even though you paid $1,000 for it, the actual cash value of it today (the depreciated value, think “price at a garage sale”) would likely be $500 at best if it’s still a relatively new model and in good shape. In a claim, if your building and contents were only insured for actual cash value you may find yourself in a very difficult position because you will not receive enough money to replace what you have lost.
- Replacement Cost Settlements: Replacement Cost settlements and the basis of claims payment are far more reasonable than the actual cash value settlement. Replacement cost basis payments will help you get back into the situation you were in before your loss or disaster by providing coverage for repairing or replacing the items insured as long as you had enough coverage at the time of loss to cover the costs.
The catch with replacement cost settlements is that your insurance company may have the choice to only pay partial payments until you have replaced the item. Sometimes you may find yourself getting a check for half of what you need, once you replace the item, the company can then reimburse the additional expenses.
In other cases, insurance companies may choose to send you to specific stores that you come to an agreement about and have you get your items there and in some cases this avoids you having to put the money out up front.
Every company is different so ask your insurance representative what can be done. In major disaster claims, insurance companies have also been known to make things easier and may just provide you with the cheque or a lump sum payment to get you started with essentials because especially in times of disaster, claims can take time and insurers can be reasonable when needed if you maintain good communication.
How Will Making A Claim Impact Your Policy and Premiums?
When you have a claim situation, always speak to your insurance representative to understand how making a claim will impact your insurability. If a claim is not your fault, or there is subrogation, make sure to get a letter of claims experience, or keep the closing notice from the claim so you can provide the information to future insurance applications. Making a claim may impact the premium or cost of your insurance for several years if you lose a claims-free discount, or if the insurance company feels like you have a claims frequency or high-risk home.
Preparing and Filing Your Insurance Claim
Filing a claim can be short or more involved depending on how small or large of a claim you need to file. Here are some helpful guidelines that will hopefully keep your homeowners’ insurance claim filing process hassle-free.
- Prepare for Forced Evacuation: When forced to evacuate your home due to a disaster the first concern for every family is to make sure everyone is safe. Worrying about property damage is second but it is important to think about how you will file your insurance claim if you don’t have access to your home.
- Hire a reputable contractor for your insurance claim: When it comes time to file your homeowner’s insurance claim, it is important to find a fair and reputable contractor. Unfortunately, there are contractors that prey on people’s fears and anxiety about what has just happened. While many of these people are honest and reputable, some are not.
- Condo and co-op owners require special kinds of insurance: If you own a condo or co-op, make sure you understand the various types of coverages and how they apply to you in a claim.
- Condo Association coverage vs. Personal Condo coverage: Be clear about the differences between the association coverage and your coverage in a claim and who pays what. If you own a condo, you must also understand loss assessment coverage for claims.
- Car Insurance claims: If you need to file an auto insurance claim, there are five basic steps to consider for a successful auto insurance claim, from deciding if you should file to expecting the call from the insurance company,
- Life and Health Insurance Claims: After a loved one dies, filing the life insurance claim can be confusing and difficult, what is worse is if you are the beneficiary and can’t find the policy, or if you don’t know if there ever was one. There are several ways to find a lost life insurance policy.
The Requirement to Submit Your Own Insurance Claims
Sometimes, when you go to the doctor or another medical provider, you may be told that you have to submit your own insurance claim form. This means that the doctor or facility does not ask the health insurance company to pay for your bill and you must do so. If you have to file your own health insurance claim here are the steps you will need to take along with some helpful tips on submitting your insurance claim form.
If You Think Your Claim is Being Handled Unfairly
State insurance commissioners resolve thousands of complaints every year. Complaints vary from disputes with insurance companies about how one’s insurance claim was handled to problems with the sale and service of an insurance policy. If you feel your insurance company has not been fair with your insurance claim or policy, you have the right to file a complaint with your state insurance commissioner.