Better Understanding Insurance Claims

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77 percent of insured drivers purchase comprehensive coverage in addition to liability insurance, and 72 percent buy collision coverage, based on an Insurance Information Institute analysis of 2012 National Association of Insurance Commissioners data.

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If you're ever in the unfortunate situation of needing to file an insurance claim, it's important to have a clear understanding of your policy and the claims process.  Your carrier will follow a formal claims procedure, but knowing as much as you can about the key components of a claim in advance will help it go smoothly.

Here's a breakdown of common claim terminology:

4 Key Components of a Claim:

• Coverage – What’s covered?  How the terms and conditions of your policy apply to the facts of the loss, and how does case law apply? 

• Liability – Who did what wrong?  Or what is the duty owned? (1^st party claims do not have a liability component, but are evaluated based on the cause of the loss and if that cause is covered or excluded under the policy)

• Damages – What damage was sustained in the loss and how is it going to be evaluated?  The terms and conditions of the policy reflect how certain property is evaluated.

• Resolution – Can the claim be settled/ negotiated?  If an amicable settlement cannot be reached the parties can agree to go to alternative dispute resolution, such as mediation or arbitration.  If no common ground can be found the claim could go to trial.  During any stage of the claim or resolution process, the claim can be litigated and litigation does not prevent a settlement or alternative dispute resolution. 

Tina Schott, CPCU, AIC, AIS
Claims Manager, Property Operations