What Is an Insurance Claim?

An insurance assessor inspects a damaged vehicle

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An insurance claim is a formal request for payment made by someone to their policy provider. A claim is made after an incident occurs that's covered by the policy. Payment from a claim is usually used to replace or repair property or pay for health care costs related to an injury.

Key Takeaways

  • An insurance claim is a request from a policyholder to receive compensation from the policy provider.
  • Claims are filed after a covered event has occurred, such as a natural disaster, house fire, or car accident.
  • The money from a claim is meant to help replace and repair property, or medically treat people covered by the policy.
  • The process to file a claim will vary by company, type of coverage, type of claim, and specific policy, so review your contract for details.

Definition and Examples of an Insurance Claim

A claim is simply a request made to your provider. When you make a claim, your property has been damaged, or you have been injured, or an event specified in the policy contract that would trigger a payout has otherwise occurred. You can only claim something that is caused by one of the named perils listed in your policy. Your policy covers and compensates you for losses or damages. A claim is a request for that compensation after you pay your share of the costs if you have any.

For example, if you have collision car insurance and get into an accident with another driver, you'll want to file a claim with your car insurance company to cover (or reimburse) the costs that stem from the accident so that you don't have to pay out of pocket.

How Does an Insurance Claim Work?

Many factors dictate what your claims process will look like. It could involve mailing documents, calling a representative, using the company's app, or a combination of these actions.

Your claims process depends on how much you have to pay before your provider does, called the "deductible." You pay your deductible, and your provider pays the rest of the loss. If you need to find your basic coverage, look for the declaration page of your policy to find it. 

Your claims process will also depend on the type of claim you are making. Home and personal property claims can become lengthy processes. You may have meetings with adjusters, get approvals for estimates, make repairs, or replace items. The process for health insurance can differ in that it often takes place without your involvement.


Due to the complex nature of claims, it's easy for both parties to misunderstand each other. You need information from them, and they need it from you. However, it doesn't always flow the way it should. Help yourself by keeping records.

If you feel that your provider has not been fair with your claim or policy, you have the right to file a complaint with your state insurance commissioner.

Payments Depend on Your Policy

Before starting the claims process, you may want to review how your provider will pay a claim. You might know someone who was paid more than another for the same type of damage or loss. Many think this is because the other person has a better provider. However, this isn't always true. You choose coverage options when you purchase your policy. The person who received more money from their claims may pay a higher premium for better coverage.

The best way to avoid this is to be clear about what types of costs, contents, or personal property are covered, and find out whether there are any special limits or restrictions. Think about the specifics of what you are insuring as well. For example, if you are purchasing homeowners insurance, and you have extra structures on your property, figure out whether your policy will cover any claims relating to the buildings and their contents.

Types of Insurance Claims

The type of coverage you have greatly impacts how much you get paid in a claim. One important factor is the contrast between actual cash value and the cost to replace items.

Actual Cash Value

Actual cash value is the fair market value of any items. This value is the current value of the item, not what you paid for it. Not many items gain value with time and use. Actual cash value claims never receive enough money to replace the items lost.

For instance, suppose your TV set is a few years old. You paid $1,000 for it when you bought it, but now, the actual cash value of it is close to $500, at best. If you filed a claim, you would only get $500, leaving you to pay for the rest out of pocket or to buy a cheaper TV than you had.

No two companies handle claims the same, even if they both use the same payment system.


In major disaster claims, filing can be extra-complex. Companies have been known to cut a check while the claims process plays out. The more communication you have with your provider, the more likely you are to have a good outcome on your claim.

Replacement Costs

Replacement cost claims payments are far more favorable than actual cash value, because these payments help you get back the items without extra cost to you at that time. The only catch is that you need to ensure that your policy has enough coverage at the time of loss to cover the costs.

Which Should You Choose?

With replacement costs, you'll have higher premiums than if you would with cash value. The key is to decide how likely it is that your property or the contents will be damaged, lost, or stolen. If it is likely to happen, you might prefer replacement costs. If the odds are low that anything will happen, or if you have the money to fix the damage or replace the items after getting the cash value, actual cash value might work for you.

Do I Need to File an Insurance Claim?

The cost you pay for premiums is based upon how risky you appear to the provider. In some cases, if you make a claim, it can impact your costs for many years. On the other hand, you could also lose your discount for not following the rules as laid out in your policy.


Your provider might become concerned about an increase in claims or risk to your property after you file a claim and raise your premiums.

When you need to file a claim, speak to your representative. Have them explain how making a claim will impact your wallet. If an accident that results in a claim is not your fault, be sure to get a letter of claims experience. Make sure you keep the closing notice from the claim so you can provide the information to future insurance applications.

Requirements for Filing an Insurance Claim

Filing a claim can either be a short or long process. It will depend on how small or large a claim you need to file. Here are some helpful tips that might keep your claim-filing process hassle-free.

  • Safety first: When you're forced to evacuate your home due to a disaster, the first concern for every family should be to make sure you're all safe. Worrying about property damage is secondary to your safety.
  • Hire a reputable contractor for your claim: If you have to file a claim for your home, it's vital to find a fair and reputable contractor. Some prey on people’s fears and anxiety when they need help the most. While many of these people are honest and reputable, some are not.
  • Condo and co-op owners require special kinds of insurance: If you own a condo or co-op, make sure you know what the many types of coverage are and how they apply to you if you file a claim.
  • Condo association coverage and personal condo coverage: Association coverage and your coverage in a claim differ in who pays for what. If you own part or all of a condo, you should understand loss assessment coverage for claims.
  • Car insurance claims: If you need to file an auto claim, you'll need to take certain actions to make it go smoothly.
  • Life and health insurance claims: After a loved one dies, filing the claim can be confusing and difficult. It becomes worse if you're the beneficiary and can't find the policy, or if you don't know whether there ever was one. Many websites exist to help people find a lost life insurance policy, which are usually handled at the state level.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Association of Insurance Commissioners. "Consumer Resources."

  2. Insurance Information Institute. "Do Auto Insurance Premiums Go Up After a Claim?"

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