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Updated Nov 02, 2023

The Insurance Claims Process and How to File

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Nicole Urbanowicz, Senior Writer & Expert on Business Operations

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If you are in an accident or your business suffers a loss that is covered under a business insurance policy, one of the first steps you need to take is to file an insurance claim. Filing a claim starts the process of making sure you get money for the losses you incur. The best insurance providers make the claims process simple, but it’s important to know how insurance claims work and how to file one.

What is an insurance claim?

An insurance claim is a request made by the insured (the policyholder) to the insurance company for a loss covered under the policy agreement.

For example, let’s say you operate a fleet of company vehicles and one of your drivers is involved in an accident. To start the process of the insurance company paying for repairs to the vehicle, you would need to file a claim with your insurance carrier. The insurance company may then approve or reject the claim based on an assessment.

How to file an insurance claim

The claims process will vary based on the type of insurance you are filing the claim for, such as workers’ compensation, business property, professional liability, errors and omissions, or business auto. Here are the steps you’ll take to file an insurance claim.

1. Determine how to file.

You’ll start by determining how your insurance provider allows you to file claims. Many providers let you file claims online, but some companies require you to speak with an agent over the phone.  

The claims process could include downloading and mailing documents, uploading documents to an online insurance portal, faxing documents, calling a toll-free hotline or using an app. Knowing how the process works for your insurance provider will make it easier and quicker to file the claim. 

2. Gather the necessary information.

Next, you’ll gather the basic information your insurance provider will need: 

  • Contact information for you and others involved
  • Your policy information (if available)
  • The type of loss (auto, property, general liability or workers’ compensation)
  • The date of the incident
  • A description of the loss or any injury

If you took any photos immediately following the incident, you’ll want to submit those to your insurer as well. In addition, you should provide your insurance company with an inventory of anything that was damaged or ruined. 

FYIDid you know

Be sure to check your insurance policy’s declaration page, which provides detailed information on your coverage and your deductible amount, which is your out-of-pocket cost until the insurance carrier’s payment is applied.

3. Take quick action.

It is crucial to contact your insurer immediately following an accident, when your property is damaged or when you are affected by any peril that could be filed as a claim under your policy. Just be sure to review the specifics of your policy, since it may exclude certain issues arising from natural disasters and damages.

Immediate action is necessary, especially in cases of building-related damage. In these instances, your insurer will need you to take the proper steps to protect your property from further damage, even while the claim is being filed and/or processed. Document all observations related to the accident or peril, including permits and licenses, names and addresses of the parties involved, and photographs of the damage.

4. Prepare for the adjuster.

Within a few days of filing an insurance claim, you’ll be assigned an insurance adjuster. The adjuster is responsible for evaluating the damage and determining what the insurance company is responsible for covering. You’ll be required to provide proof of loss within 60 days of the initial insurance claim.

5. Consider talking to an attorney.

If your case is complex and you need some additional assistance, you might consider working with an insurance attorney, who can help you gather the necessary documentation and ensure that you provide everything the insurance company has requested. This person can also help you if you run into a dispute with your insurer. [Read related article: A Crash Course in the Business Legal Terms You Need to Know]

What happens after a claim is filed?

Once you file an insurance claim, a claims adjuster will determine how much the insurance company should pay toward the claim by gathering information about the incident and your policy’s coverage.

The adjuster’s job is to settle your claim as quickly and cost-efficiently as possible. In case an adjuster contacts you, keep all of the details of your incident handy, along with any applicable repair, service or replacement estimates to provide to the adjuster and record in case of a dispute or litigation by a third party. 

This is some of the relevant documentation to save and keep on hand:

  • Receipts
  • Accident reports
  • Police reports
  • Photographs of the damage or incident (to substantiate the loss)
  • Medical records and bills
  • Estimates from contractors
  • Auto repair estimates
  • Invoices

In certain cases, the insurance company will suggest a lawyer and may cover the cost of the attorney as well as any settlement or judgment.

How are claims paid?

Once the adjuster receives and investigates the validity of the claim and determines the amount of coverage according to your policy, they may request more information to review. 

Once that review is complete, the claim will be approved or denied. Any payment you receive for a loss will be subject to the policy’s limits and deductible, which is the out-of-pocket amount you are responsible for.

Bottom LineBottom line

Follow up with your adjuster if you haven’t heard back after a few weeks, or a month at most.

If your claim is denied, your insurer will typically give you a reason why. Your claim could be denied for several reasons, such as any of these circumstances:

  • Your claim form contained an error, such as incorrect or insufficient information (e.g., a typo in the policy number).
  • The incident or loss occurred outside the time horizon of the policy (i.e., before the policy’s effective date or after the policy’s expiration date). Also, timely notice of a loss is required for many business insurance policies, and a delay can lead to a denied claim — so be sure to notify your insurer immediately following the incident or loss.
  • The incident or loss occurred outside the scope of the policy, meaning the incident was listed as a policy exclusion or is not covered under the policy. An example of this would be a general liability policy that will not cover loss or damage to your own property (only third parties’ property). Another example is an auto accident that happened while you were driving for personal reasons, which would be outside the scope of the business auto policy. 

What are the costliest insurance claims?

According to a study by The Hartford, these are the most costly insurance claims for small businesses (broken down by average claim cost):

Reputational harm


Vehicle accidents




Product liability


Customer injury or damage


Wind and hail damage


Customer slip and fall


Water and freezing damage


Struck by object


Theft and burglary


Is it worth making an insurance claim?

Based on the numbers revealed above, is it worth filing an insurance claim? Often, yes, but not always. It depends on these factors:

  • The incident
  • Your claims history
  • Whether you are the at-fault party
  • Your policy coverage
  • The amount of the loss

Claims history

If you have a history of filing accident claims, another claim may increase your risk profile and thus your insurance premium. Databases keep records of claims so insurers can assess you. Filing a claim that is close to your deductible amount could also impact your report.

You should consult your insurance company if you have concerns about your insurability due to an extensive history of accidents or loss. If your insurance company drops you as a policyholder, your new insurance carrier may adjust your new premiums as a result of higher risk. Even if you stay with your current provider, you take the risk that your premiums will increase. 

TipBottom line

At-fault party

If you are determined not to be at fault for the incident, a third party may pay. For example, if you were involved in an auto accident that was not your fault but resulted in damage to your business vehicle, the at-fault driver’s insurer might pay the repair costs via subrogation. If you sign a waiver of subrogation, it waives future legal action and claims on the incident. 

Therefore, you should report accidents immediately to your insurer and notify the insurer if you agree to any of these types of final settlements. Consult an attorney as soon as possible before signing subrogation waivers to settle any accidents, and find out if you live in a no-fault auto accident state.

Policy details

Consider the details of your policy, especially in the case of general liability. Many policies prohibit the insured from making a payment without consent, and some don’t allow direct payments to third parties. 

This could ultimately cause a notice of policy cancellation or nonrenewal for the violation. There is also the risk that your case will be sent to litigation, so you should not take these actions without speaking to your insurance representative or attorney.

Cost of the loss

If the loss is less than the cost of your deductible; doesn’t affect another party; carries no chance of legal action, further damage or associated medical costs; and you can pay out of pocket, you may not want to file a claim.

If you decide not to file a claim, there are ways to deduct the loss from your tax returns. How you should go about this depends on the legal structure of your business. Be sure to consult a tax accountant in this case and carefully weigh your options.

Jamie Johnson contributed to this article. 

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Nicole Urbanowicz, Senior Writer & Expert on Business Operations
Nicole Urbanowicz is a small business owner who studied management and finance at Harvard, where she received her master's degree. Before becoming an entrepreneur herself, she started her career writing about business and investing for Dow Jones and The Wall Street Journal, after which she became a research analyst for Allured Business Media, using business intelligence data to develop strategic guidance. Today, in addition to running her e-commerce business, Urbanowicz continues to provide financial analysis and advice and uses her certification from the New York State Department of Financial Services to consult on insurance matters.
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