Claims, Benefits, and Dividens

Insured individuals who have suffered losses and want to receive payments must notify their insurance company through a process called a claim. Insurance contracts always contain a condition that the insured must provide a proof of loss in order to be paid.

A claim begins when someone who suffers a loss completes and signs a statement describing exactly what happened that led to the loss. Most insurance claims require additional supporting evidence as well. For example, a person filing a life insurance claim must provide a copy of the policyholder’s death certificate. For a health or disability claim, the insured typically must provide a doctor’s report. Someone claiming damage to an automobile usually has to provide a repair estimate to the insurance company.

Once someone files a claim and provides necessary evidence, the insurance company’s claims representative, known commonly as a claims adjuster or claims service representative, reviews it. A claims representative verifies that a claimant (person filing a claim) is entitled to the payment requested.

First, the claims representative verifies that the claimant actually purchased an insurance policy from the company and paid a premium that covered the time period when the loss occurred. For example, if a policyholder misses payments, allowing a policy to expire, the insurer would make no payments on claims made after the policy’s expiration.

The claims representative also verifies that the terms agreed upon in the policy cover the specific claim, including the particular events that caused a loss. For example, standard policies to insure people’s homes generally cover damage from such natural events as lightning and storms. However, they do not cover damage from floods or earthquakes (those kinds of coverage are sold separately). Ultimately, careful claims processing assures that other members of a claimant’s insurance group pay out as little as possible in premiums to adequately cover valid claims.