What is Insurance and Claims?

What is insurance? It is an essential question in these times of uncertainty. Insurance is a financial agreement between the policyholder and the insurer. You will have to pay a fixed amount as a premium. In return for this. The insurer provides financial coverage based on policy terms.  

What is an Insurance Claim?

An insurance claim is a formal request for payments made by someone to the policy provider. The policyholder can file a claim after an incident occurs. This incident must be covered within the policy. Once the formalities are done, the insurance provider pays the claim amount. 

1. Life Insurance 

When the life-assured, person dies. The insured person’s family must inform the insurance company as soon as possible. Usually, the assignee or nominee under the policy informs the insurer. While filing the claim, the claimant should enter the death details. This will include the cause, date and place of death. 

In such unfortunate circumstances, the insurance agent will assist the family in fulfilling the claim formalities. The nominee will have to provide the following documents:

1. Claim form 
2. Death certificate
3. Policy document
4. Deeds of assignments/re-assignments (if any)
5. Legal evidence of title, in case there is no nominee
6. Form of discharge
7. Other medical documents required by the insurer 

Formalities On the Maturity of the Claim

When the life insurance policy matures, the insurer informs the policyholder and the discharge voucher 2-3 months in advance from the date of maturity. This will consist of the information on the payable amount. The policyholder signs the discharge voucher, has the signature witnessed and sends it to the insurance company along with the original policy bond. If the policy is assigned in favour of any other person, then the claim amount will be paid only to the assignee who will give the discharge.

2. Hospital Claims

There are two ways of raising the claim in hospitals:

1. Cashless basis: When you raise a claim on a cashless basis, you can go for treatment only at a network hospital of your policy’s Third Party Administrator (TPA). You will have to seek authorisation to avail of the treatment on a cashless basis per the procedures in the prescribed form.
2. Claims on a reimbursement basis: Whenever you want to raise the claim, inform the insurance company as per the procedure. After hospitalisation, ensure you have all the required documents, such as prescriptions, bills, claim forms, and discharge summaries.

3. Claims on Motor Insurance

You must raise a damage claim in case of damage to your vehicle claim. You need to immediately inform the police and your insurance company so that they can assess the loss. Do not move the vehicle from the accident spot without permission. If your policy covers cashless service, you do not have to pay out of your pocket to cover damages. In such cases, your insurance company will pay directly to the workshop.

4. Theft Claim

If your vehicle is stolen, inform the police and insurance company immediately. To make a claim, submit all the required documents and duly filled the claim form to the insurer. You may have to surrender your vehicle keys to the insurance company.

What is the Insurance Claim Filing Process?

An insurance claim is a security measure against financial help in case of any unforeseen medical and life emergencies. Claim helps cover medical bills and living costs. Let us now understand the claim processing stages:

1. When the accident occurs, it must be reported to the insurance provider. Some providers want you to report the accident within 24-48 hours of the accident. Certain insurers even allow claim raising within 7 days of the accident. 
2. To file a claim, you must first fill up claim forms on the website or at the branch office of your insurer. You will be required to attach relevant documents along with the form. 
3. Sometimes, you may have to attach a copy of the FIR. You must submit medical bills, discharge slip, and medical reports in medical emergencies. In case of a life insurance claim, the policyholder's family will have to attach a copy of the death certificate. If you have any doubt, you must contact your insurer. 
4. You must submit an original policy bond and your claim form. You must also submit the bank mandate to receive the claim amount.
5. Documents that support the authenticity of your claim are also required.
6. After the form and document submission, the insurance provider will review and validate the claim.
7. Once your claim meets all the terms and conditions as per the policy, the insurer will approve your claim.
8. The insurance provider must provide you with the benefits specified in your policy. In the case of life insurance claims, the beneficiary will receive the claim amount.
9. The insurer can do one of the following. It can either provide an upfront lump-sum amount or give you the payout in the form of regular payments based on the terms of the policy.

The claim process depends on how much deductible you must pay before the provider pays the rest of the loss. Whenever you sign up for a plan, you agree to pay a certain amount before your provider. This amount is to be paid while making a claim. It can be listed as the percentage of the cost. You must pay this amount before being paid with the claim amount. The insurer then pays the rest of the claim as per the policy limit and sends the money to the person to be paid.

What is Insurance Claim Coverage?

There are two main types of insurance claim coverage. The type of coverage you have impacts how much you will get paid in a claim. 

1. Actual Cash Value: It represents the fair market value of any items. This is the current value of that item. It is not the amount that you will get paid for it. Such claims never receive a sufficient amount to replace the lost items.

Suppose, you bought an electronic for $500 a few years back. The actual cash value of that electronics is approximately $250. If you will file a claim, you will not receive $5000 but only the actual cash value. Do remember that different insurance providers have different policies and payment systems.

2. Replacement Costs: Replacement cost claims payments are better since you can get back the items without paying any extra cost at that time. You must ensure that the policy has enough coverage to cover costs during loss.