What Is an Insurance Claim? Your Simplified Guide to How Claims Work
Written by Team Clearcover
Insurance is designed to be there when you need it most. But what exactly do you do when you experience an incident or loss and need to file an insurance claim?
In this guide, you’ll get clear guidance for the insurance claim process, including:
What an insurance claim is
Types of insurance claims
How insurance claims work
How to file an insurance claim
Learn about Clearcover’s smarter, faster, easier car insurance claims process.
What is an insurance claim?
An insurance claim is an official request made by you (if you’re the insurance policy holder) to your insurance company to pay for a covered incident after you experience a loss or damages.
Let’s dive into the different types of insurance claims you can file.
(Need to know how to file a car insurance claim? Tap here.)
Types of insurance claims
There are many types of insurance claims, but the most common include:
Auto insurance claims: Car insurance companies offer coverages—many of which are state-required—to protect you and your finances when loss or damages happen on the road or to your vehicle due to things like collisions and weather-related car damage.
Health insurance claims: Health insurance claims are usually filed to help pay for both routine and unexpected health care costs.
Life insurance claims: A life insurance company sells policies that issue a financial payout when the covered person passes away. Life insurance claims are often filed by the policyholder’s next of kin.
Homeowners insurance claims: Home insurance companies help homeowners protect their residence’s structure and belongings from financial loss after unexpected incidents. Homeowners usually file claims themselves directly after an incident.
Renters insurance claims: Renters can carry a renters insurance policy to insure them against loss or damage to property in a place they do not own.
Business insurance claims: Small-business and commercial insurance companies provide coverages to protect business owners and minimize the risk of financial loss to the business due to unexpected incidents.
Fun fact: Benjamin Franklin organized the first official insurance company back in 1752! (1)
From centuries-old policies, such as property insurance and life insurance, to more modern insurance options, like pet and identity theft insurance, the industry has grown and expanded to include a wide variety of coverages and policy types. (There are almost too many to list here!)
But at Clearcover, we’re your car insurance experts. And we have one of the fastest car insurance claims processing times in the industry.
Learn how you can get affordable, reliable car insurance that’s easy to understand—and fast to use.
How do insurance claims work: The insurance claims process
Now that you know what an insurance claim is and the most common types, let’s talk about how claims work and the insurance claims process.
But first, we’ll go over the decisions you make when you purchase an insurance policy (because they have a lot to do with what kinds of claims you’ll be able to file).
Insurance policy basics: Important definitions
When you purchase an insurance policy, you’ll choose coverages and coverage limits that will ultimately determine what protections are included in your policy.
A coverage is a financial protection you purchase from your insurance company for a specific incident or a specific set of benefits.
A coverage limit is the maximum amount that the insurance company agrees to pay for a covered loss. It can be split between per person and per incident. (You agree to these coverage limits when you purchase your policy, so it’s important you understand what you’re buying.)
These selections determine what kinds of incidents your insurance company will cover and the maximum amount they’ll pay out for each incident. They also influence the cost of your insurance premiums, and for certain coverages, your deductible.
A premium is the set fixed cost you agree to pay your insurance company for your policy. In most cases, you can choose to pay your premiums monthly or in a lump sum once or twice a year.
A deductible is what you agree to pay out of pocket when you file an insurance claim for a covered loss. Depending on the nature of your policy, you may be required to pay this amount before your coverage kicks in.
However, it’s important to understand that not every kind of insurance policy operates in the same way.
For example, while you’ll need to select a deductible for your comprehensive or collision car insurance coverage as well as your health insurance policy, you won’t need to select deductibles for your liability car insurance coverage or life insurance policy.
After you select your coverages and coverage limits and accept all the legal documents, you will officially have insurance coverage!
You’ll also get a copy of your insurance policy. It will outline all the details, including what incidents are covered and what things are considered excluded events.
An excluded event is an incident that’s not covered by your insurance policy.
At this point, you’ve entered into a formal agreement with your insurance company: You pay your premiums, and they commit to paying you for insurance claims for covered losses—according to the details outlined in your policy.
The process of filing an insurance claim
When you experience a loss—for example, you experience a car accident and you need to replace your vehicle—you’ll file an insurance claim with your insurance company.
Then, a claims representative will evaluate your incident to determine if the incident is covered by your policy, as well as how much money (if any) will be paid out by the insurance company. (Keep in mind that even if your insurance policy covers the claim, you’ll need to pay any applicable deductible out of pocket if one applies.)
Once a decision is made, your insurance company will issue a payment to you directly, or to the person or company that payment is due.
With Clearcover, we’ve simplified the car insurance claims process with our award-winning app. Learn how digital car insurance claims work (and how fast Clearcover’s process can be!).
How to file an insurance claim with your insurance company
Here are the basics to filing an insurance claim:
When you experience a loss or a need to file a claim, notify your insurance company right away. Learn what to do when you need to file a car insurance claim.
Contact your insurance company via the information outlined in your policy. (If you’re a Clearcover customer, you can file your car insurance claim directly in the app.)
Provide details about the incident, including the date and time it occurred. Include photos if applicable. (If you’re filing a health insurance or life insurance claim, this might not be necessary.)
If anything else is needed to complete your claim, your insurance company will let you know. Then, complete any steps required, such as providing a statement or specific documents or completing a medical exam, to finish the process.
How do I read my insurance claim?
Once your insurer accepts your claim, you’ll probably receive some kind of summary of their decision as well as how much money you’ll be receiving (if any) to pay for your losses.
If you filed a car insurance claim, here’s a quick guide to the terminology you might see in that summary:
Actual cash value is the actual cost to replace or repair your property based on its current worth, including any depreciation due to wear and tear over time.
Replacement cost is the amount of money it would take to get a new comparable replacement of your property, no matter its condition at the time of the loss.
At Clearcover, we’re on a mission to make car insurance easy to understand. Discover how to switch car insurance today.
Once your insurance claim is completed, depending on the nature of your claim and if you’re due any payout, you’ll receive a payment from your insurer. And then you’re done! Many insurers offer electronic payment options that allow you to receive your funds faster, which can help cut out the time spent waiting for a paper check in the mail.
What happens when an insurance claim is made against you?
Because we’re car insurance experts, we’re going to speak to car insurance claims here specifically. If a car insurance claim is made against you, your auto insurance company goes to work on your behalf. Your insurance is designed to be there for you in cases like this.
In the majority of cases, any negotiations or payments that are necessary will be handled by your insurance company representatives. You’ll simply be contacted if additional information is needed.
How can insurance claims affect your insurance premium
Again, we’ll speak to car insurance claims specifically here.
Your driving record is taken into account when calculating your insurance premiums. That means after you file an insurance claim (or after an insurance claim is made against you) when it’s time to renew your policy, your premiums may be reevaluated by your insurance company based on an updated driving history.
This doesn’t mean there will always be an increase in your premiums because you’ve filed a claim. However, in cases where you’ve had traffic violations or claims, your insurance company may need to increase premiums based on the additional risk they take on to insure you. Learn more about car insurance rate increases and decreases.
Every insurance company has different practices around policy reevaluation for renewal. At Clearcover, we reevaluate policies every six months for a few reasons—including meeting possible claims costs and to make sure our customers are getting the best rate.
And the good news is that Clearcover offers great car insurance rates, and switching car insurance companies could even save you money. So if you’re not happy with your current insurer, shopping around for the best price in car insurance can be a good idea.
Reliable car insurance that’s hassle-free and easy to understand
The insurance claims process doesn’t have to be slow and confusing—in fact, it shouldn’t be!
With Clearcover’s Clear Claims™, eligible car insurance claims can be paid out in as little as 30 minutes, and our current record is 7 minutes (yes, you read that right).
Learn more about our crazy-fast car insurance claims process—and see what you could pay for better car insurance today.
