Insurance Claims Handling and Procedure

Claims Handling

• A key factor in insurance company reputation is their claims handling process
• Delayed or withheld payments damage the insurer's reputation
• Prompt notification of potential claims is important to the insurer, allowing investigations and potentially recovering from a negligent party
• Policyholders need to notify insurers of claims within a stipulated time period (usually 30 days)
• The insured is responsible for proving the loss occurred due to an insured peril

Claims Procedure

• Insurers use claim forms to determine liability and legal responsibility
• Police reports are crucial when police are involved in accidents
• Third-party personal injury claims are complex and difficult to assess due to subjective factors such as pain and suffering
• Investigations are thorough and without prejudice, aiming for a balance between speed and accuracy
• Insurers are required to pay claims within 30 days after receiving a properly executed discharge

Additional Claims Considerations

• Fire claims may prompt investigations into the insured's background to detect potential fraud
• Theft claims require immediate notification to the police
• Recovered stolen vehicles become the property of the insurer, who may return them to the insured in exchange for the claim payment
• Total loss occurs when repair costs exceed the vehicle's market value

Assessments

• Assessors are independent professionals or companies contracted by insurers to evaluate claims, excluding the smallest ones
• Assessing involves inspecting damaged vehicles, reviewing repair estimates for accuracy and depreciation, estimating repair time for loss of use claims, and verifying part availability
• Assessors recommend approval for repairs, they don't usually authorize them directly

Own Damage Claims

• Insurers cover own damage claims under Third Party Fire & Theft or Comprehensive policies
• Claims exceeding the policy excess are admissible
• Insurers have options for indemnity: repair, replacement, or cash payout, within policy limits

Excess/Deductible

• The insured bears a portion of the loss, usually a percentage of the sum insured, referred to as the excess or deductible

Under-insurance and Salvage

• In total loss cases, the insured receives any assessed value exceeding the policy sum insured, minus the excess, including any salvage value

Policy Conditions Governing Claims

• Policyholders are responsible for promptly notifying insurers of accidents and claims made against them, as well as legal proceedings, and must provide requested information and documents
• Policyholders shouldn't admit liability without insurer consent
• Theft or malicious damage incidents require immediate police notification

Contribution

• If multiple policies cover the same risk, insurers share the cost of the loss proportionally
• Personal accident benefits are not indemnities and are excluded from the contribution condition

Subrogation

• This condition allows insurers to negotiate and recover from third parties on behalf of the policyholder to minimize their expenses
• Policyholders must cooperate and refrain from handling claims independently

Arbitration

• Disputes about claim amounts (especially total loss vehicle valuations) are referred to an independent arbitrator before legal action
• A binding arbitration award must be issued before legal proceedings can begin against insurers

Limit of Indemnity

• This clause ensures that insurers won't exceed the policy limits, even if multiple parties are entitled to indemnity in an accident

Inter-Company Claims Agreement

• Agreements facilitating claim handling between insurers to reduce costs

This quiz examines the essential aspects of claims handling and procedures in the insurance industry. It covers the impact of timely notifications, responsibilities of policyholders, and the importance of documentation like police reports. Test your knowledge on how insurance companies manage claims to maintain their reputation.