How a car insurance claim works

The parts of the policy that pay

Many personal auto policies in the US are built on a standard form written by ISO, an insurance industry organization, or on a close copy of it. Insurers change names and add endorsements, but the structure is usually the same, and knowing it tells you which part of your policy a claim falls under. The 2005 edition of that form, filed with the Virginia Bureau of Insurance, has these parts:

A claim under your own policy (Parts B, C or D) is a first-party claim. A claim against another driver's Part A is a third-party claim, and it works differently; see first-party vs. third-party claims. States add their own required coverages, such as personal injury protection in no-fault states.

From the first call to payment

1. Report the loss. Tell your insurer how, when and where it happened, with the names and addresses of anyone injured and any witnesses. You get a claim number; write it on everything you send.
2. Acknowledgment. The insurer confirms the claim, assigns an adjuster and tells you what it needs, such as photos, the police report number or a repair estimate.
3. Investigation. The adjuster takes statements, looks at the police report, inspects or photographs the car and decides which coverages apply and, where another driver is involved, who was at fault.
4. Proof of loss. You send the documents that show the amount: estimates, invoices, medical bills, a signed proof of loss form if the insurer asks for one.
5. Decision. The insurer accepts the claim, accepts part of it, or denies it. A denial should be in writing and name the policy provision it relies on.
6. Payment. The insurer pays you, the repair shop or your lender, minus any deductible, or repairs or replaces the car as the policy allows.

A simple glass or hail claim can move through these steps in days. A claim with injuries, a fault dispute or a total loss takes longer. The adjuster's role at each step is covered in what a claims adjuster does.

What the policy asks of you

Part E of the standard form lists the duties of anyone seeking coverage. The insurer has no duty to provide coverage if your failure to meet them is prejudicial to it, meaning it hurt the insurer's ability to investigate or defend. Under that form you must:

• Give prompt notice of how, when and where the accident or loss happened.
• Cooperate with the investigation, settlement or defense of any claim or suit, and promptly send copies of any legal papers you receive.
• Submit to an examination under oath, and to physical exams by doctors the insurer selects and pays for, as often as it reasonably requires.
• Authorize the insurer to get medical reports and other pertinent records.
• Submit a proof of loss when the insurer requires one.
• For damage to your car: protect it from further loss (the insurer pays reasonable costs of doing so), report a theft to the police promptly, and let the insurer inspect and appraise the damage before repair or disposal.

The insurer's side of the clock

Every state has a law against unfair claim practices, and many set deadlines through a regulation based on the NAIC's model rule for property and casualty claims. Under that model the insurer must acknowledge a claim within 15 days, reply within 15 days when you write and expect an answer, and accept or deny within 21 days after proof of loss. If it needs more time, it must tell you why within 21 days and write again every 45 days. Once it accepts the claim, it should pay an undisputed amount within 30 days.

States change these numbers. Texas, for example, gives an insurer 15 days to acknowledge a claim on your own policy, 15 business days to accept or reject it after it has everything it asked for, and 5 business days to pay. The figures for your state are on its page in claim rules by state, such as Texas claim rules.

When you disagree with the result

• Ask in writing for the reasons and the policy language behind a denial or a low offer. If you object to a denial, the NAIC model has the insurer tell you in writing that the state insurance department can review it.
• Use the appraisal clause when you agree the loss is covered but not on the amount of damage to your car. Each side picks an appraiser, the two pick an umpire, and a decision agreed by any two is binding. See the appraisal clause.
• Complain to your state insurance department when deadlines pass or you get no explanation; see filing a complaint.
• Legal action against your own insurer is possible under the standard form only after you have complied with all the policy's terms, and your state's deadline to sue keeps running while you talk.

Before a small claim, compare the payout with your deductible and a likely premium change; the claim or pay calculator does the arithmetic.

Questions people ask