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How Do Insurance Companies Pay Out Claims?

When you purchase auto insurance, you do so in order to have peace of mind and to legally operate your vehicle. You wouldn’t automatically think about having to use your insurance policy and, in fact, hope that you don’t. With that said, should the time come when you need to contact a claims representative to put in an insurance claim, you should know how insurance companies pay you for them.
The specific process will vary depending on the insurer, however, there is a general process for submitting insurance claims. By knowing what happens during the claims processing period, you can rest easy with the fact that you are prepared should this instance occur.
The following information will highlight the claims process and answer the following questions:
  • How do insurance companies pay out claims?
  • How long does it take for an insurance company to pay out a claim?
  • When should insurance claims be submitted?

How Do Insurance Companies Pay Out Claims?

Many dents on blue car's body
When you have an auto insurance policy in effect, you know your car is protected if anything should happen to it. From car accidents to incidents caused by Mother Nature, you can protect your vehicle with an insurance policy and have a safeguard on your side. So, how do insurance companies pay out claims?

The Insured Individual Files Their Claim

In order to put the process into motion, there has to be an accident or loss that requires the claims processing. When you get into a car accident or have damage to your vehicle, you must contact your insurance company right away. The claims representative will ask you questions and put in your claim with the insurance company. You’ll also be asked for any documents and information surrounding the loss, such as a police report or information provided by the other driver, if it was a car accident. All of this information will be included in the claims report.

The Insurance Company Evaluates the Claim

Once the claim has been filed, the insurance claims department will review the documents. They’ll make sure the policy is currently in effect and that the claim falls within the coverage guidelines.
You might also be required to meet with an insurance adjuster who will come out to your location, look at the damage, and then report their findings back to the insurance company. However, companies are starting to replace the role of the adjuster. ClaimPix has a proprietary platform that eliminates the need of an adjuster. Car damage images are uploaded directly to the insurance claims department and save time and money for both sides.
The claims representatives will then review all of the information and determine if the claim is warranted and able to be paid.

The Claim is Approved or Denied

Once all the details are reviewed, the claims department will either approve or deny the claim. They might ask for additional information in order to approve the claim or they may deny the claim if it doesn’t fall within the guidelines of the policy. Once the claim is approved or denied, you’ll receive notice of the decision.

The Insured Receives Their Payment

If your claim is approved, you’ll receive payment for the amount of the loss as determined by the insurance company. Depending on what the insurance claim entailed, you might receive the payment or the insurance company might send it directly to any vendors involved in the loss, such as a car mechanic.

How Long Does It Take for an Insurance Company to Pay Out a Claim?

Calculator and pen on the desk
So, how long does an insurance claim take? The amount of time it takes for your insurance company to pay out a claim is often determined by:
  • The complexity of the claim
  • The number of individuals involved
  • How soon you file your claim
  • Whether the insurance company has all necessary documents
  • How quickly you can meet with the insurance adjuster

When Should Insurance Claims Be Submitted?

Man typing on his laptop
If you suffer a loss, it’s important to file your insurance claim as soon as possible after it occurs. Many times your insurance policy will state when and how claims must be submitted, so you should always refer to this document when facing a claims situation. And, remember, the sooner you put your claim in, the more quickly you will receive payment.

Now You Can Be Comfortable with the Insurance Claims Process

Man washing a black car
Hopefully you won’t ever have to put your insurance policy into motion by submitting a claim, but should this occur, you can now rest easy knowing how to proceed with the claims process. The insurance claims process will vary amongst insurance companies but this gives you a general idea of how the procedure works.

Maybe you’ve just experienced a car theft. Or, perhaps your car won’t start due to a collision and you need some repairs that are covered by insurance. Whatever the case may be, with the proper insurance policy, you are covered.
Ready to explore your car insurance options? Contact A-Abana today for a quick car insurance quote!
Have questions about coverage or policies? Give our helpful insurance agents a call anytime at 888.449.0174.