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The Insurance Claims Process and How to File

Nicole Urbanowicz
Nicole Urbanowicz

An insurance claim is a critical part of getting money for your losses, so it is important to know how to file one.

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. Without a claim, you will never be able to recoup those costs.

The best insurance providers make the claims process simple. Even so, since claims are so vital to the insurance process, it is important to understand what they are 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 payment due to an incident or 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.

The claims process and how to file

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. It also varies by whether your insurance provider allows you to file claims online.

Depending upon the insurer, the claims process could include downloading and mailing in documents, uploading documents to an online insurance portal, faxing documents, calling a toll-free hotline, or using an app. You can see specific examples of a simple claims process by reading our review of AIG or our Thimble review.

This is some basic information you should have ready for all claims:

  • 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

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

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 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.

When to file a claim

It is critical to contact your insurer immediately following an accident, when your property is damaged, or when you are impacted by any peril that can be filed as a claim under your policy. Just be sure to review your policy’s specifics, 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 contractors or subcontractors if applicable), and photographs of the damage.

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 either 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.


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:

  • There was an error in your claim form, such as incorrect or insufficient information (e.g., a typo in the policy number).
  • The incident or loss occurred outside of 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 of the scope of the policy – meaning 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 of the scope of the business auto policy. Claims for defective workmanship and materials are common exclusions in builder’s risk insurance, for example.

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$50,000
Vehicle accidents$45,000
Product liability$35,000
Customer injury or damage$30,000
Wind and hail damage$26,000
Customer slip and fall$20,000
Water and freezing damage$17,000
Struck by object$10,000
Theft and burglary$8,000

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 or not 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. In the event that your insurance company drops you as a policyholder (legally, you must be notified before this happens), your new insurance carrier with this knowledge may adjust your new premiums as a higher risk. Even if you stay with your current provider, you risk your premiums going up. [Discover 11 ways to save money on business insurance.]

At-fault party

If the claim is not your fault but the fault of a third party, such as in an auto accident resulting in damage to your business vehicle, the at-fault driver’s insurer (the third party) may 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 – the insured – 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 its 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 of your case being 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 minor – such as damage to your own business property that is less than the cost of your deductible, doesn’t impact another party, and 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.

Image Credit: Pinkypills / Getty Images
Nicole Urbanowicz
Nicole Urbanowicz
Contributing Writer
Nicole Urbanowicz has worked as an editor/writer covering the finance, insurance, retail, cosmetic science, and travel industries for a number of publications. Her articles have appeared in The Wall Street Journal, Dow Jones Newswires, Associated Press, CNN Money, Yahoo Finance, WWD, and Travel Weekly, to name a few. Nicole has a master's in finance from Harvard University and a bachelor's in journalism from Boston University, and she works as an independent contractor in various industries. She is a former life and health insurance agent-producer. Nicole recently produced a YouTube series on the pandemic and its impact on businesses and the real estate market. She is based in New York City.