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How quickly must an insurance company pay a claim?

By Posted :

know before filing insurance claim

You’ve gotten into an accident and filed a claim with your car insurance company.

Your next thought is likely: How long before I can get my car fixed? The answer isn’t as straightforward as you might think.

How long does an insurance claim take?

It usually depends on your insurer, where you live and the type of claim.

Most states protect consumers by demanding insurers handle the claims promptly. Some states even require a specific period, such as 30 days. During that time, the car insurer acknowledges the claim, investigates and makes a fair settlement.

Not all states have a specific time limit. They may say an insurer must handle claims in a “reasonable time.”

Here are three examples of specific time limits:

●  California -- Insurance companies have 40 days to accept or deny a claim. If insurers need more time, they must notify you every 30 days about the claim’s status. Payment must be issued within 30 days once a settlement is agreed upon.

●  North Carolina – An insurance company has 30 days to acknowledge a claim. The acknowledgment can include denying the claim, making an offer of settlement, paying the claim or advising you that the investigation into the claim is ongoing. Loss and claim payment should be mailed within 10 business days after the claim is settled. 

● Texas -- An insurer must acknowledge the claim within 15 days of receiving it. Within 15 days of receiving all the necessary paperwork, insurance companies must accept or deny the claim. The state allows insurers 45 more days to decide on a claim, but they must inform you in writing. Once the insurer agrees to pay the claim, it must make payment within five days.

Insurers differ in how long they pay out claims, but most insurers complete the process within 30 days. It depends on the specific claim, though. For instance, personal injury claims take longer to resolve since they involve a person’s health with doctors and hospitals. These claims are not as quickly resolved as a damaged bumper or crunched door.

When shopping for a policy, it’s a good idea to ask the insurer how long it takes to pay a claim. Insurers keep track of that information. Car insurance claims differ, so an insurer may have trouble accurately estimating how long it may take to handle a future claim. Still, the company can give you an idea of averages overall.

How to file a car insurance claim

If you get into an accident, the first thing you need to do is make sure everyone is OK. Then, you’ll want to call the police if the crash involves another person. Police can investigate the collision and take statements. If you don’t call the police, you can file a police report at the station.

Here’s what to get when exchanging insurance information with other drivers:

●  Driver’s name and address

●  Driver’s insurer and policy information

You’ll also want witnesses’ names and phone numbers. Your insurance may want information from them.

Take photos of the damage to both vehicles and the accident scene. Insurers can use this information to figure out who’s to blame. If you have dashcam video, you’ll want to provide that, too.

If you were at fault, once you get back home, contact your insurance company’s claim department and let it know about the accident and provide the information they request. Ask your insurer whether to contact the other motorist’s insurer; likely, your insurer will take it from there. 

Your insurer, and the other driver’s insurer, if a claim was made with it as well, will investigate the incident.

When filing a claim for your vehicle and possible medical expenses, ask how long the process should be expected to take. That way, you can have an idea of what to expect. If there are delays in the process, a claims adjuster should contact you to inform you about any issues.

If you were not at fault in the accident, your first call should be to the at-fault party’s insurance company to make a liability claim. Then that company will investigate the claim from there. Alert your insurance company if you believe you may need to make your own collision claim or have medical coverage with your insurer, such as personal injury protection (PIP) or medical payments (MedPay). It is best, though, to let the at-fault party’s insurance pay for your vehicle’s damages instead of your own. That way, the claim will ding the other person’s future insurance rates instead of a collision claim being on your claims history.

When not to file an auto insurance claim

You have car insurance, so you should file a claim whenever your car gets dinged, right? Well, not exactly. Typically, your car insurance policy will state that you should promptly report any auto accident to your insurer. There can be a little wiggle room, though.

For instance, your insurance company isn’t going to care if you’re going to pay for a small dent you got in your bumper from backing into your mailbox. However, you can’t disregard an auto accident where you were at fault and harmed other people that will be making claims against your liability coverage.

So, before you report a claim you’ll want to think about:

●  The amount of damage

●  Your deductible

● What a claim will mean to your rates

●  Whether anyone else was involved in the accident

If your car suffered damage that was less than or similar to your deductible amount, then it’s probably best for you to handle the repairs yourself. That’s especially true if no other driver or property is involved. If you file the claim, you’ll have to pay the deductible. If your insurer then raises your rates, you’ll have lost money on the accident.

You may not want to file a claim if the vehicle only involved your vehicle. No one else was hurt. No one’s property was damaged. In that case, if the damage is minor, you may want to handle the repairs yourself. Otherwise, you’ll pay a deductible and have that incident on your claims history.

Car insurers charge you based on risk. If you file multiple claims, the insurer will consider you risky and will likely raise your rates. Insurers on average increase car insurance premiums by between 26% and 32% after an accident. That’s between $360 to $460 more money you’d spend annually for car insurance.

That said, if only your windshield is damaged, you’ll probably want to file a claim. Car insurers usually don’t make you pay a deductible for windshield damage or increase your premiums. So, the company will pay for the repairs and you won’t get hit with a deductible or higher rates.

How do insurance companies pay out claims?

Who the insurer pays for the claim depends on who caused the accident.

If you’re to blame, your insurer will pay to repair the other driver’s car. Your liability car insurance will pay to the policy’s limit for damages and for the medical bills of those you injured. In no-fault states, medical expenses for injuries would first go through each party’s own PIP or MedPay coverages.

If you have collision coverage, which is optional and covers damage to your car regardless of fault, your insurance company will pay for damage to your vehicle, up to your car's actual cash value. You will additionally have to pay your collision deductible.

Insurance companies’ policies and state laws vary. Some insurers will make the insurance claim check out to the repair shop and you. Insurers do this to reduce fraud.

If you own your car, the insurer may send the check directly to you or will send it to the mechanic. If you go to a repair shop with a relationship with the insurer, the company may send the check directly to the body shop. In that case, you’ll still have to pay the deductible.

A benefit of going through an insurer's preferred shop is that car insurers often cover additional crash-related work that’s needed beyond the original estimate. That said, preferred shops may look for ways to lower the repair bill to help the insurer, which could lead to cutting corners.

However, if you have a lease or existing car loan, the insurer will likely make the insurance claim check out to you and the leaseholder or lienholder. In that case, you may have to pick up the check at the financial institution or take it there to get it signed over. The lienholder may want to examine the vehicle, too. All of this can delay paying the repair shop.

If another driver is to blame and that driver’s insurance is paying for repairs, the process can move smoother. In that case, the insurer usually pays you or the body shop the check directly.

Whether your name is on the insurance claim check and which insurance company pays the claim, you want to use the money responsibly.

How long after an accident can you file an insurance claim?

The length of time when you have to file a car insurance claim following a crash varies by state and type of claim. Property damage claims usually have shorter windows than car accident claims.

States often require you to notify your insurer immediately or within a short period, such as five or 10 days. Reporting personal injury claims, meanwhile, has a longer period, usually two years. Property damage claims can also be filed years after the incident -- often at least two years. These limits vary by state, so check with your state’s insurance department to see how long you have to file.

Keep in mind, the longer you take to make a claim the more likely the insurance company will want to perform a deeper investigation to find out why there was a delay. They’ll also see if any additional damages were done since the initial incident (those would not be covered by this claim but have to be a separate claim). It’s best if you plan to claim for an auto accident to do it promptly.

You contact the consumer division of your state's department of insurance to file a complaint or ask for advice if you have problems with an insurer. Those issues may include your insurance company or another party's insurance company dragging their feet -- or denying the claim but not explaining why. A state's Department of Insurance job makes sure insurers treat consumers fairly and pay claims promptly.