An insurance claim is the actual application for benefits provided by an insurance company. Policy holders must first file a claim before any money can be disbursed to the hospital or repair shop or other contracted service. The insurance company may or may not approve the claim, based on its own assessment of the circumstances.
Individuals who take out home, life, health, or automobile insurance policies must maintain regular payments called premiums to the insurers. Most of the time, these premiums are used to settle another person's claim or to build up the available assets of the insurance company. Occasionally, however, an accident will happen that causes real financial damage, such as a automobile wreck, a tornado, or a work-related accident. At this point, the injured policy holder has the right to file an insurance claim in order to receive money from the insurance company.
In general, the insurance claim is filed with a local representative of the insurance company. This agent becomes responsible for investigating the specific details of the claim and negotiating the payment from the main insurers. Many times, a recognized authority — like a medical professional, repair shop, or building contractor — can file the necessary forms directly with the insurance company. The policy holder may not want to file if the damage is minor or another party has agreed to pay out-of-pocket for their mistake, however.
After a claim is filed, the insurance company may send out an investigator called an adjustor or appraiser. This person's job is to objectively evaluate the damage and determine if the repair estimates are reasonable. This is to prevent possible fraud by contractors who may inflate their bills for additional compensation. Insurance companies tend to accept the adjustor or appraiser's evaluation as the final word.
Some insurance claims may not be recognized by the insurance company for any number of reasons. If a claimant's premiums have not been paid in full, the policy itself may not be active. Another insurance company may also have already agreed to pay for the damages listed in the claim. This happens quite often in automobile accidents where one party is held responsible.
Another reason that a claim may be rejected is a failure to fall under covered conditions. Most insurance policies spell out specific areas which qualify for benefits, and if the accident or damage claim was caused by carelessness or an unavoidable "Act of God," the insurance company has the right to withhold payments. A claim is the only way to officially apply for benefits under an insurance policy, but until the insurance company has assessed the situation, it will remain only a claim, not a pay-out.