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How quickly must an insurance company pay a claim?

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Dented bumperWhen a thunderstorm knocks down a tree and drops it on your house, you don't want to wait to repair that gaping hole in the roof. When your car is totaled, you're probably anxious to settle the car insurance claim so you can get a check and purchase a new set of wheels.

But how quickly is your insurance company required to pay the claim? It depends on where you live.

In most states, regulations protect consumers by setting a timeframe for how promptly an insurance company must acknowledge your claim, investigate it and make a fair settlement.

However, the specifics vary from one state to another. Some states do not set a time limit aside from requiring claims to be paid within a "reasonable time." Other states may require payment within 30 days after a settlement is reached.

When you compare car insurance quotes from multiple companies, ask each insurer how quickly it pays claims, says Robert Passmore, senior director of personal lines policy for the Property Casualty Insurers Association of America (PCIAA).

An insurer that pays claims promptly is likely to trumpet that fact, he says.

"Insurance companies keep track of how fast they pay because they can market that information to potential customers," says Passmore.

J.D. Power also offers customer service satisfaction ratings for some of the largest insurers.

Specific guidelines for insurance claims

Some states have detailed guidelines for how quickly claims must be handled. For example, states have the following rules for both home and auto claims:

  • California requires an acknowledgment of all claims within 15 days. In that state, insurance companies are required to accept or deny the claim within 40 days after receiving proof of the claim. If the claim is accepted, payment must be made within 30 days from the date settlement was reached.
  • In Texas, the acknowledgment must come within 15 days, and approval or denial of the claim within 15 days after receipt of all requested information. The insurance company has the option of extending the time for up to 45 days if it offers an explanation for the extension.
  • South Carolina simply states that claims must be made within a reasonable time period.

To find out about your state, check out the National Association of Insurance Commissioners' map to your state insurance department's contact information.

Peter Lore, associate vice president of claims for Nationwide, says that while insurance companies can provide average claim times, each case is unique, making it difficult to accurately estimate how long it might take to resolve a specific claim.

Speed the process by being prepared

Although insurance companies only have to respond as promptly as state regulations require, there are things you can do to speed up the claims process.

For example, long before disaster strikes, people with homeowners or renters insurance policies should perform an inventory of their valuables so they can provide immediate proof of everything covered by the policy, Lore says.

"Take a digital camera or a video camera and document your belongings, particularly anything valuable such as art, jewelry or collectibles," Lore says. "Then, store the data on an e-mail account or someplace in addition to a disc in your home in case of a fire."

Passmore agrees that a proactive approach can speed up the claims process.

"Consumers should be prepared with as much information as possible when they make a claim in order to make the process faster," says Passmore.

Lore says you should communicate as much as possible with the insurance company, providing documentation such as receipts for items under a claim or an automobile title if your wrecked car is a total loss.

Quickly complete all paperwork requested by the insurance company and respond immediately to phone calls, e-mails or mail concerning the claim. Keep a log of all communication and copies of all documents related to the claim.

How to handle insurance claim problems

As soon as you file a claim, ask the insurance claims professional how long it should take to receive payment. That way, you should have a "realistic set of expectations" about when you'll be paid, Lore says.

"If the customer is confused about any part of the process or a delay in being paid, they can call the claims professional," Lore says. "If that does not satisfy them, they can ask to speak to a supervisor to rectify the situation."

Lore says claims investigations sometimes take longer than expected, but that the claims professional should be in touch with customer when a delay occurs.

If you're unhappy with how the process is unfolding, Passmore suggests contacting the agent who sold you the insurance policy to resolve a complaint.

State regulations typically require insurance companies to provide a valid reason for denying a claim.

Customers who still are not satisfied with their insurer can file a complaint with the state department of insurance, which regulates insurance companies. Typically, you can make complaints via the agency's website.

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