Claim
A formal request by a policyholder to their insurance company for payment or coverage of a loss that may be covered under their policy. The insurance company then investigates and determines whether to approve, deny, or partially approve the request.
Example
“After her car was damaged in a hailstorm, Sarah filed a claim with her auto insurance company and received $3,200 to cover the repairs.”
Memory Tip
Think 'I'm calling for my money' - when you have a loss, you CLAIM what your insurance owes you under your policy.
Why It Matters
Claims are the primary reason people buy insurance - to receive financial protection when covered losses occur. Understanding how to properly file and manage claims can mean the difference between receiving full compensation and being denied coverage when you need it most.
Common Misconception
Many people believe that filing any claim will automatically raise their premiums or that they should avoid filing small claims. While frequent claims can affect rates, legitimate claims are exactly what insurance is designed for, and failing to report incidents promptly can sometimes void coverage entirely.
In Practice
John's home suffers $15,000 in water damage from a burst pipe. He immediately contacts his homeowner's insurance and files a claim. After an adjuster inspects the damage and confirms it's covered, the insurance company approves payment of $13,000 ($15,000 minus his $2,000 deductible). John uses this money to hire contractors and restore his home.
Etymology
From the Old French 'clamer' and Latin 'clamare' meaning 'to cry out' or 'to call,' reflecting the act of calling upon one's insurance for help.
Common Misspellings
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See Also
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