Why Do Insurance Claims Take Long To Settle? All To Know

Why Do Insurance Claims Take Long To Settle? All To Know
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Why do some insurance claims take long to settle? Well, the more serious the accident or incident that led up to an insurance claim, the longer the claim (and the payout) will take. Companies can process some claims more quickly than others when there are fewer details and people involved in the claim.

It’s also important to mention that some insurance companies are just slower to pay out claims than others. For example, if you work with a small insurance carrier that only has one adjuster, it could take much longer to receive your payout. Large insurance companies have teams of adjusters who work to resolve claims all day long.

What is an insurance claim?

An insurance claim is a formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event. The insurance company validates the claim (or denies the claim). If it is approved, the insurance company will issue payment to the insured or an approved interested party on behalf of the insured.

Insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams. In some cases, a third party is able to file claims on behalf of the insured person.

However, in the majority of cases, only the person(s) listed on the policy is entitled to claim payments.

A paid insurance claim serves to indemnify a policyholder against financial loss. An individual or group pays premiums as consideration for the completion of an insurance contract between the insured party and an insurance carrier. The most common insurance claims involve costs for medical goods and services, physical damage, and loss of life. It also includes liability for the ownership of dwellings (homeowners, landlords, and renters), and liability resulting from the operation of automobiles.

For property and causality insurance policies, the number of insurance claims you file has a direct impact on the rate you pay to gain coverage (typically through installment payments called insurance premiums). This is irrespective of the scope of an accident or who was at fault. The greater the number of claims that are filed by a policyholder, the greater the likelihood of a rate hike.

In some cases, it is possible that if you file too many claims, the insurance company may decide to deny you coverage.

Types of insurance claims

Health insurance claims

Costs for surgical procedures or inpatient hospital stays remain prohibitively expensive. Individual or group health policies indemnify patients against financial burdens that may otherwise cause crippling financial damage. Health insurance claims filed with carriers by providers on behalf of policyholders require little effort from patients; the majority of medical are adjudicated electronically.

Policyholders must file paper claims when medical providers do not participate in electronic transmittals but charges result from rendered covered services. Ultimately, an insurance claim protects an individual from the prospect of large financial burdens resulting from an accident or illness.

Life insurance claims

Life insurance claims require the submission of a claim form, a death certificate, and oftentimes the original policy. The process, especially for large face-value policies, may require in-depth examination by the carrier to ensure that the death of the insured did not fall under a contract exclusion. A contract exclusion can include suicide (usually excluded for the first few years after policy inception) or death resulting from a criminal act.

Generally, the process takes approximately 30 to 60 days without extenuating circumstances. This affords beneficiaries the financial wherewithal to replace the income of the deceased or simply cover the burden of final expenses.

Property and casualty claims

A house is typically one of the largest assets an individual will purchase in their lifetime. A claim filed for damage from covered perils is initially routed via the Internet to a representative of an insurer, commonly referred to as an agent or claims adjuster.

Unlike health insurance claims, the onus is on the policyholder to report damage to a deeded property they own. An adjuster, depending on the type of claim, inspects and assesses damage to property for payment to the insured. Upon verification of the damage, the adjuster initiates the process of compensating or reimbursing the insured.

How does the insurance claim process work?

The insurance claim process involves the following steps in order:


When a loss or event occurs, the policyholder needs to notify the insurance company as soon as possible. This can be done through a phone call or an online claims portal. Prompt notification allows the insurance company to initiate the claims process promptly.

First Notice of Loss (FNOL)

The initial notification triggers the creation of a First Notice of Loss (FNOL) report. The policyholder provides details about the incident, including the date, time, location, and a description of what happened. The insurance company may assign a claims adjuster to the case at this stage.


The policyholder is required to gather and submit relevant documentation to support the claim. This may include photographs or videos of the damage, police reports, medical records, invoices, receipts, or any other evidence related to the loss.

The more thorough and detailed the documentation, the smoother the claims process will be.


The insurance company will investigate to verify the details of the claim. This may involve gathering additional information, interviewing witnesses, or consulting with experts. The purpose of the investigation is to determine the validity of the claim and assess the extent of the loss.

Coverage assessment

The insurance company reviews the policy to determine the specific coverage that applies to the claim. They assess whether the policy covers the loss or event and to what extent. This assessment helps determine the amount of compensation the policyholder is eligible to receive.


Once the investigation and coverage assessment is complete, the claims adjuster calculates the value of the claim based on the policy terms and conditions. They consider factors such as deductibles, depreciation, or any applicable limits. The adjuster may also consult with specialists or use industry-standard tools to determine the value of the loss.

Claim settlement

If the claim is approved, the insurance company will offer a settlement amount to the policyholder. This amount may be paid directly to the policyholder or a third party, such as a repair shop or medical provider. The settlement may cover the cost of repairs, replacement of damaged items, or reimbursement for expenses incurred due to the loss.

How to initiate an insurance claim?

If you hold an insurance policy and have experienced damages covered by it, you can initiate a claim by contacting your insurer. This can be done by phone, and increasingly online. Once the claim has been started, the insurer will collect relevant information from you and may ask for evidence (such as photos) or supporting documentation.

The insurer may also send an adjuster to interview you and evaluate the merits of your claim.

It involves the following steps:

Filing the claim

The insured party must notify the insurance company about the loss or damage covered by the policy and submit the necessary documentation to support the claim.

Claim investigation and evaluation

The insurance company will investigate to assess the validity of the claim. This may involve gathering evidence, interviewing witnesses, and evaluating the extent of the loss or damage.

Based on the investigation, the insurance company will evaluate the claim and determine the coverage and amount payable under the policy. This evaluation may consider factors such as policy terms, deductibles, exclusions, and policy limits.

Negotiation and settlement offer

If there is a disagreement between the insured party and the insurance company regarding the settlement amount, negotiation may take place to reach a mutually acceptable resolution. The insured party may provide additional supporting documentation to support their claim.

Once the evaluation and negotiation process is complete, the insurance company will make a settlement offer to the insured party. The settlement offer may include a payment of funds or the provision of services. This depends on the nature of the claim and the policy coverage.

Acceptance or Rejection

The insured party has the right to accept or reject the settlement offer. If the offer is accepted, the insurance company will proceed with the payment or service provision as agreed upon. If the offer is rejected, further negotiation or dispute resolution methods may be pursued.

Claim Payment

If the settlement offer is accepted, the insurance company will make the payment to the insured party according to the agreed terms. The payment may be made in a lump sum or installments, depending on the circumstances and the policy provisions.

How long does an insurance claim take?

States often limit the amount of time insurance companies can take to decide on and pay out a claim. States have different guidelines. However, insurance companies must often decide whether or not to accept a claim in about 30 days and pay it out shortly after that.

But while states have rules about the time claims can take, things can get more complicated (and take longer) when insurance companies need extra time to investigate a claim. 

Claims might take longer if they involve:

  • An accident where fault isn’t clear
  • Multiple drivers and vehicles
  • Serious injuries or long hospital stays
  • Significant property damage
  • A company with a smaller claims-handling department
  • Disputes about settlement amounts

For example, a claim you make when your car battery dies and you have to call a tow or if your window was smashed during a car break-in is pretty straightforward. That type of claim moves more quickly than one involving multiple drivers, serious injuries, and a lot of back-and-forth between parties.

States also have rules that limit how long insurance companies can take to send you a payment after approving a claim. Generally, insurance claim payouts take less time than the claim itself.

After a settlement is reached, insurance companies usually have to send you the payout in as little as a few days. Some states require companies to pay out a claim “immediately” or “promptly” after a decision, or no more than 30 days afterward.

Why do some claims take longer?

The more serious the accident or incident that led up to the claim, the longer the claim (and the payout) will take. Companies can process some claims more quickly than others when there are fewer details and people involved in the claim.

Here are a few of the biggest reasons:

  • The severity of the injuries. If a driver is badly injured in a car accident, expect the settlement to take longer. The driver has to finish treatment in order to determine how much money they can get.
  • Dispute over which driver was responsible. After an accident, it’s not always immediately clear who was responsible. If there is a dispute about each driver’s negligence, it’s going to take the insurance companies longer to settle the claim.
  • Back-and-forth negotiations. In general, settlement negotiations can take a lot of time. There’s usually a good amount of back-and-forth between lawyers, victims, and the car insurance companies.

However, there are laws against undue claims delays. An insurance company needs to provide a payout within a certain number of days from the time the claim is settled and everything is finalized.

It’s also important to mention that some insurance companies are just slower to pay out claims than others. For example, if you work with a small insurance carrier that only has one adjuster, it could take much longer to receive your payout. Large insurance companies have teams of adjusters who work to resolve claims all day long.

Your participation can also affect how quickly you’ll get paid for a car insurance claim. If your claims adjuster asks you for documents and you take days to get it to them, it will slow the process down.


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