How do car insurance companies pay out a claim?
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UPDATED: Jul 14, 2021
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- Insurance companies process a claim to pay for damages following an accident
- Giving the insurance company detailed information about your accident will help expedite your claim
- Ask about the record of claims payments for insurance companies when you consider purchasing a policy
When shopping for insurance, one of the most important things that you should know is often overlooked.
How does your insurance company pay out a claim? Not only do you need to understand the process of claims, but you should also be aware of how efficiently the company you are considering pays their claims.
The claims process is the result of carrying insurance. It is something you hope you never have to use, but when you do, it is understandable to expect it to work quickly and equitably so that you can get your car repaired and receive your monetary benefits as quickly as possible.
Insurance Reserve Requirements
Insurance companies keep a reserve of money in their bank to cover claims. This is both a federal and state law.
This insurance reserve is meant to cover losses from their customers as well as any internal company loss the insurance company encounters due to other means.
Also, they use this amount to conduct normal business. But they should always have enough reserve to handle all claims.
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The Insurance Claims Process
The insurance claims process is fairly straightforward. From the moment you file a claim, the internal departments of the insurance company work to process your claim.
There are several steps in the claims process. But, as long as you call right after your accident to file your claim and give them all of the essential information, it should be a simple procedure.
Here are the steps to processing a claim:
- You call your insurance company and report your accident claim.
- Notify the other parties if you intend to file a claim that is ruled their fault.
- Get doctors’ statements if you were given any medical treatment.
- The insurance company will investigate your claim and call you if more information is needed.
- The insurance company will send an insurance adjuster to your location to check out your claim.
- The adjuster will make a decision on the costs and ask you to get two estimates.
- They will usually ask you to have it fixed with the mechanic that quotes the lower amount.
- The insurance company sends a check to you or your mechanic to fix your car.
- If a replacement is needed, the check may be sent to a local car dealer so that you can purchase another car for the amount of which the claim was settled.
How long will the claims process take?
The time that it takes for an insurer to process your claim depends on some different factors. But there are some things you can do to speed the process along and ensure that your claim doesn’t get hung up in the paperwork.
- Call your insurance company immediately following the accident – The sooner your insurance company knows about your accident, the sooner they can begin to file the required paperwork, the sooner they can process your claim.
- Give them enough details so that they can proceed with their investigation without delay – If the insurance company does not have all of the facts, it may hold things up while things are getting straightened out. Tell them everything you know and answer the specific questions they have to the best of your ability.
- Be available to answer additional questions if they need them answered – If you miss a call from your insurance company, they will call back. But you will want to return their call as soon as possible. Insurance companies must handle a large number of claims every day. The sooner they hear back from you, the sooner they can complete your claim.
- Be aware of what is in the police report – Usually, the police officer who handles the accident will inform you about his decision before he leaves the scene. He may also inform you of who was at fault in the accident. You can tell your insurance company this information and they will verify it with the official police report.
- State the location and time of day of your accident and the weather conditions – Insurance companies need to know the time of day and location where the accident occurred. This aids in their record-keeping and statistics, so make sure this information is correct.
- Tell them if other cars were involved in the incident and as much information as you have about the other driver – This will help them determine if they should contact the other party’s insurance company to request a payout from them.
- Wait for the insurance adjuster to call you – Once you file the required paperwork, all you can do is wait for the insurance company to contact you.
- Get your estimates and arrange for repairs – Once you get your estimate, you can arrange for your car to be repaired once you receive your funds.
- Wait for final disbursement of funds – Once you receive your claims check, you can get your car repaired and get back on the road.
Compare Companies and Check Their Claims Record
The best thing you can do when choosing a car insurance company is to find a company with a good claims record. If your insurance company has a good reputation for paying their claims quickly, it means that they have their act together.
It also implies that they have a healthy reserve so that they always have enough money to handle any claims that come in.
Insurance companies, in general, try their best to pay their claims promptly, provided all of the information adds up. Being honest and reporting your claims quickly will expedite your claim.
Shop and compare companies on our site and ask your agent to tell you about the claims process if you have any questions. Knowledge is power. Don’t commit to a policy until you know it is the best for you.