How do car insurance claims work?

Car insurance claims work as a way for you to request financial compensation from your insurance company after a covered incident. Car insurance claims can be filed for things like serious accidents as well as minor scratches and dents, though which insurance company you file a claim with depends on the details of the situation. Generally speaking, the at-fault driver’s insurance company pays for accident-related claims.

How the Car Insurance Claims Process Works

1. The policyholder files a claim online, by phone or through their insurance company’s app.

   Most insurance policies do not give an exact timeframe for when you must file the claim, but some states, like New York, require that claims be filed within 30 days of the accident. Just remember that the longer you take to file, the longer you’ll be waiting for compensation if your claim is approved and your insurer takes their full allotted timeframe.

2. The insurance company must acknowledge the claim within 10 to 15 days, on average.

   Most states specify exactly how long an insurer has to acknowledge the claim and begin the investigation process. For example, insurance companies must respond to the claim within 14 days in Florida, or within 10 days in Pennsylvania.

3. The insurance company will investigate the claim.

   Insurance adjusters will look over the details of the incident to determine fault, the extent of damage, and if there is any reason to suspect fraud. The more serious the incident, the longer this investigation may take.

4. The insurance company must decide if the claim is accepted or denied after around 15 to 30 days.

   After the claim is investigated, the insurance company decides if the incident will be covered or not. In some states, insurance companies have 15 days from acknowledging the claim to deciding if it is approved. Other states, like California, give insurers more time (30+ days) to investigate and come to a decision on a claim.

5. Payments should be made promptly for approved claims.

   Once a claim is approved, the insurance company has between 5 and 30 days to compensate the policyholder in most states. However, some states do not disclose a specific timeframe for payments and instead suggest that insurers make payments promptly or in a reasonable amount of time.

The insurance company may not pay the policyholder directly, though. For example, they may pay the mechanic directly for repair costs or a lender or lessor for financed vehicles.

Final Thoughts

Keep in mind that there are some situations where filing a claim doesn’t make sense. If the damage would cost less to repair than your deductible, for example, you should reconsider filing a claim. This is especially true considering that an insurance claim could raise premiums by as much as 32% depending on the insurer and circumstances.

To learn more, check out WalletHub’s guide to car insurance claims.