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In insurance, a claim is a formal request by a policyholder to their insurance company for coverage or compensation for a covered loss or policy event. The claim is what you submit to get the insurer to act on your policy’s promise of financial protection against potential losses.

What is a claim in Insurance?

To understand insurance claims better, think of them as the bridge between having an insurance policy and receiving the payment you’re entitled to under the terms of that policy. When a claim is filed, the insurance company evaluates the situation to determine their responsibility to reimburse the insured party.

Example: Imagine a business that suffers a fire loss in their warehouse. The business owner files an insurance claim to cover the damages. This involves providing evidence of the damage and the cost to repair or replace the destroyed assets. The insurance company assesses the claim to decide if the event and the losses are covered under the policy’s terms and then determines the amount they will pay to the policyholder.

Key Components of a Claim

  • The Policyholder: This is the individual or entity that owns the insurance policy. They are the ones who file the claim when a loss occurs.

  • The Insured Event: This component is critical—it’s the actual event leading to the loss. The event must be one that is covered under the policy, such as fire, theft, or flood.

  • The Proof of Loss: This is the documentation that the policyholder must provide to prove that the loss occurred and to what extent. This documentation can include photographs, police reports, receipts, and more.

Types of Claims

There are a wide variety of different claim types, these are some of the most common. 

Property Damage Claims

These are claims made to cover damage to property, such as buildings, equipment, and inventory.

Liability Claims

These arise when a policyholder is held legally responsible for causing harm to another party. For example, if a customer slips and falls in a store, leading to injury, a liability claim can be made against the business’s liability insurance.

Health Insurance Claims

Filed to cover medical treatments. When policyholders receive medical care, they or their healthcare provider can file a claim with their insurer to pay for the services.

Travel Insurance Claims

These can include claims for lost luggage, trip cancellations, or medical emergencies while traveling.

How Insurance Covers Claims

When an insurance claim is filed, the insurer will first verify that the policy is active and that the claim event is covered. The company will then assess the amount of loss or damage that has occurred. This assessment can involve sending an adjuster to physically inspect the damage and determine the cost of repairs.

Once the claim is approved, the insurance company will typically issue payment to the policyholder, less any applicable deductible. This deductible is the amount the policyholder is responsible for paying out-of-pocket before the insurer’s coverage kicks in.