The insurance settlement process is a very long and complex process but insurance companies that really do care about their clients make an effort to make the process as fast and straightforward as possible. The way an insurance claim would be handled usually depends on the type of insurance policy; For instance, a life insurance settlement claim would be handled differently from an auto-accident claim.
Before we go ahead to pick out some specific policies, let’s talk about the general way insurance claims and settlements are handled regardless of the insurance policy. First, you have to understand that an insurance company is in business to make as much profit as possible and in order to achieve this, the premiums that it receives must exceed the settlements that it pays out so an insurance company develops strategies to reduce the claims it pays out as much as possible. This is how an insurance company handles claim settlements-:
How Insurance Settlements and Reimbursements Work
Table of Content
- 1. Data collection
- 2. Assignment of case to a claim adjuster
- 3. Hiring your own claims adjuster
- 4. Setting up of reserves to fund insurance claims
- 5. Evaluation of damages by the claims adjuster
- 6. Negotiation of settlements
- 7. Seeking redress in court
- 8. Settlement of claims
- a. Fire Insurance Claims
- b. Motor Vehicle Accident Insurance Claims
- c. Life Insurance claims
1. Data collection
First, the insurance company collects as much information as it needs to be able to understand your claim and prove that it is genuine and valid. They would usually request for evidence like photographs, medical reports, and witness statements, forensic statements and several other relevant documents.
2. Assignment of case to a claim adjuster
Like I said, the insurance company is looking for ways to pay less claims and it usually does this through the claims adjuster. Once the insurance company receives your claim and gathers the information that it needs, it creates a claim file and assigns it to a claim adjuster whose duty it is to evaluate the claims and negotiate a settlement.
3. Hiring your own claims adjuster
To get the best out of your insurance claims, you may need to hire your own insurance adjuster who would help in presenting your case to the insurance company. An insurance adjuster usually has the experience needed to negotiate favorable settlements from your insurance company. However, you must be ready to concede a certain percentage of your insurance settlement to the insurance adjuster as payment for his services.
4. Setting up of reserves to fund insurance claims
The government requires insurance companies to set up reserves as soon as insurance claims are made, to show that the company has enough funds to settle the claims. These reserves are usually set up before negotiations begin.
5. Evaluation of damages by the claims adjuster
The claims adjuster now goes to work and evaluates your claims based on the information you have provided. Such evaluation would help the insurance company decide on how much it wants to offer as settlement.
6. Negotiation of settlements
It becomes a little bit technical at this point. If you are lucky enough, the insurance company would offer you the exact settlement you asked for but in most cases, the insurance company would offer you an amount that is a little bit lower than the amount that you have requested for. You don’t really have to accept this amount if you feel it’s not fair enough.
In fact, the claims adjuster knows that you wouldn’t accept this amount so he would offer you a sum that is a little less than the insurance company is willing to pay. If the insurance company still insists on paying less than what you are willing to settle for, then it’s time to involve your lawyer.
7. Seeking redress in court
You can sue your insurance company and seek redress in court if you feel unsatisfied with the insurance company’s position.
8. Settlement of claims
Once you have been able to reach an agreement with the insurance company, the insurance company hands you a cheque in the sum that you have agreed on.
How Insurance Settlements and Reimbursements Work for Specific Insurance Policies
a. Fire Insurance Claims
As the insured in a fire insurance claims process, it would be expected that you would take steps to minimize the loss and prevent further damage of the property after the fire. Minimizing the loss could be achieved by calling fire fighters to put out the fire in time and then making some small repairs that would protect the house from further damage.
Next, you should report the case at the nearest police station and obtain a written police report. Ensure that your insurance company is informed of the incidence immediately. The insurance company would ask for evidence and then appoint an insurance adjuster who would evaluate and negotiate settlements.
b. Motor Vehicle Accident Insurance Claims
First the insurance company should be notified of the accident preferably before the vehicle is moved from the scene of accident. This is in order to enable the insurance company conduct an on-site investigation. If it is impossible to inform the insurance company immediately, then adequate pictures and video recordings should be taken at the scene of the accident before the vehicle is moved.
In the case of motor vehicle damage, the vehicle should be taken to an automobile repair workshop so that the costs of repair or replacement can be estimated. The estimates would then be sent along with the claim form to the insurance company. The insurance company would now conduct its due diligence and if it can establish that it was a genuine accident and that the driver was licensed to drive at the time of accident, the insurance company would offer a settlement.
c. Life Insurance claims
The claimant who is most likely the beneficiary of the insured would be expected to initiate the claims process by submitting a claims form which would contain details like the death certificate of the insured, policy document, medical records in case of illness before death, certificate of burial and proof of age assured. Upon receipt of the claim forms, the insurance company calculates the amount payable to the beneficiary and makes the payment.
The process is usually more complex than it sounds because the insurance company would want to make certain that the insured is really dead and died of natural causes and that no games are being played just for the sake of getting insurance settlements.