Insurance Claim: Definition, How It Works, and Types

An insurance claim is a request by a policyholder to an insurer for coverage or compensation for a covered loss or policy event. The insurer investigates the claim and either approves payment to the insured (or an approved interested party) or denies it. Claims can cover medical care, property damage, life insurance benefits, liability, and more. In some cases a third party may file on behalf of the insured, but generally only those named on the policy may claim benefits.

Key takeaways

• An insurance claim seeks indemnification for a covered loss.
• The insurer validates the claim and pays if it’s approved.
• Filing claims—especially repeatedly—can raise future premiums or lead to nonrenewal.
• Know your policy and consult your agent before filing when in doubt.

How an insurance claim works

1. A policyholder experiences a covered loss and notifies the insurer.
2. The insurer collects information, evaluates the claim, and may send an adjuster to inspect damage or interview involved parties.
3. The insurer approves or denies the claim. If approved, it issues payment according to the policy terms, often after deducting any applicable deductible.

Claims exist to indemnify the insured for financial loss in exchange for premiums paid under the insurance contract.

Claims and premium effects

Filing claims affects how insurers view your risk. For property and casualty policies (auto, homeowners, renters), more claims generally increase the likelihood of higher premiums or nonrenewal. Factors insurers consider include:
* Number and frequency of past claims
Fault for the most recent loss
Type of loss (some types suggest recurring liability)
* Driving record, local risk environment (natural disasters), and credit history (where allowed)

Not all claims have equal impact. Liability-prone claims (dog bites, slip-and-fall, water and mold damage) tend to raise rates more than minor, first-time incidents. Some insurers offer first-accident forgiveness; others do not.

Types of insurance claims

Health insurance claims

• Typically filed by medical providers electronically on behalf of patients.
• Paper claims are used when electronic submission isn’t available.
• Purpose: protect individuals from large medical expenses.

Property and casualty claims

• Policyholders must report damage to property they own (home, auto).
• An adjuster inspects damage, verifies coverage, and recommends payment or repair.
• Common perils: collisions, storms, theft, fire.

Life insurance claims

• Beneficiaries submit a claim form, the insured’s death certificate, and often the original policy.
• Large policies may require investigation to rule out exclusions (e.g., recent suicide, criminal acts).
• Typical processing time is several weeks (commonly 30–60 days), but complex cases take longer.

Special considerations

• Understand your specific policy language, exclusions, and how your insurer treats different types of claims.
• Ask your agent about forgiveness rules, lookback periods, and how claims affect premiums before filing. Some agents are required to report inquiries to the insurer—don’t wait until a loss occurs to learn company practices.
• Minimize the number of claims you file. As a guideline, consider handling minor repairs out of pocket and reserve claims for catastrophic or financially significant losses. Repeated claims—even if not your fault—can jeopardize renewability.

How to initiate a claim

• Contact your insurer by phone or online to start a claim.
• Provide details and evidence (photos, police reports, medical records).
• The insurer may request additional documentation and may send an adjuster to evaluate the loss.

Should you file if the damage is less than your deductible?

If expected repair costs are below your deductible, filing may not make sense. Exceptions:
* You want the at-fault party’s insurer to pay for your damage.
* The loss could affect other claims or future liability.

When unsure, consult your agent to understand the likely outcome and potential premium impact.

Why claims can increase premiums

Insurers adjust premiums based on perceived future risk. Filing a claim signals a higher likelihood of future losses, which can lead to higher rates. If a claim is clearly not your fault, you may be able to dispute a surcharge or have your insurer pursue subrogation against the responsible party to avoid a rate increase.

Final note

Claims are a vital part of insurance protection, but they carry consequences. Know your coverage, weigh out-of-pocket repairs against potential premium hikes, and communicate with your insurer or agent before filing when possible.