Motor Insurance Claims Settlement process

Motor Insurance Claims Settlement process

Car accidents have many unfortunate consequences. One of these consequences is that it becomes difficult, from that moment, to get cheap and desirable first month free car insurance. Another inconvenience is you have to deal with the motor insurance claim process.

The claims processing system is different in each auto insurance company. But part of the auto insurance claims process is designed with the following in mind:

  1. Settlement options 
  2. Final settlement of the claim
  3. Post claim settlement process

Settlement Options

The following options are available for the insurance companies to make the settlement of the claim.

Repair option  

Most of the own damage partial loss claims are settled under this option. Whenever a vehicle is damaged the insurance company will ask the insured either to repair the vehicle in its owned workshop or at a workshop approved by it. In such a situation the insured need not pay upfront to the workshop. The insured will only pay the deductible and the items which are not covered under the policy. The amount admissible under the policy will be directly settled by the insurance company to the respective workshop. 

Reimbursement option  

In this type of claim, the insured is authorized to repair his vehicle at the workshop of his choice and pay the amount directly to the workshop. The payment amount is assessed and approved by the insurance company in advance. After payment to the workshop, the insured will approach the insurance company to recover his claim. He will be asked to submit the original estimate and invoices. Once all the necessary documents are received the claim is settled as agreed and as per the terms of the policy. This option is known as the reimbursement option. This is also known as a payment option. Almost all third-party liability claims, total loss claims, and some of the partial loss claims are routed through this option. 

Replacement option 

This is usually applied in case of total loss claims. When the vehicle is totaled, the insurance company has two options either the replace or to make a payment option. If the insurance company chooses the replacement option, they are supposed to provide the insured with the same make and model vehicle in lieu of the totaled vehicle. However, this option is rarely exercised in motor insurance. 

Final Settlement of the claim 

Once the entire claim settlement process is complete, the claim needs to be settled as soon as possible. Most of the regulators around the world have prescribed time within which the claims have to be settled. The insured should be informed immediately if his claims are denied. In case his claim is admissible and once all the relevant papers are received then the claim should be settled. Any portion of the claim which is not payable should be identified and the same should be informed to the claimant. 

In case of any dispute, proper negotiation procedure as outlined in the policy should be followed. If the negotiation is not successful then the insured should be informed about his rights of approaching the regulatory bodies. On handing over the payment and receiving the satisfaction voucher the claims process may not end at the insurer side. However, for the insured, the process might have ended.

Post claim settlement process

 The post-claim settlement process can be categorized into three as follows:

  1. Reinsurance Recoveries
  2. Selling of salvage and adjusting the settlement
  3. Recoveries from the third parties 

Reinsurance recoveries  

Where reinsurance is involved the claims department should provide the necessary papers to the department concerned for recovering the losses from the reinsurers. Normally motor insurance portfolio is fully self-insured by most insurance companies. However, some high valued cars or a high sum insured for third party and catastrophic losses may be covered through reinsurance. 

The reinsurance recoveries are not difficult only the procedure should be properly followed. In case of the involvement of reinsurers, the claims department will forward a copy of settlement papers along with the statement of account on a monthly or annual basis as the case may be for recovery from the insurance companies. 

Selling of salvage and adjusting the settlement 

The claim settlement of motor insurance especially related to the own damage and the third-party property damage may result in a good amount of salvage for the insurance company. The insurance company has an option to settle the claimed net of salvage or recover the salvage. In the case of the net of salvage claim settlement, there are no recoveries. 

However, where the settlement is based on the recovery of salvage, the salvage becomes the property of the insurance company. Claims representatives are usually tasked with the responsibility of disposal of the salvage. The money recovered in the sale of salvage reduces the claims cost. There are guidelines issued by the insurance companies for the disposal of the salvage. 

Recoveries from the third parties 

In motor insurance recovery from the third parties play an important role in reducing the claims cost of the insured and the insurance company. If an accident occurs due to the fault of the third party the insured and insurance company on behalf of the insured has a right to claim from the third party for the loss which resulted from the accident. 

The insurance company will take a subrogation letter from the insured this will give the insurance company the right to pursue the recovery from the third parties and this recovery is adjusted in the claim amount thereby reducing the claims cost to the insurance company and the insured. Some companies have a separate recoveries department and, in some companies, the task is assigned to the claims department. 

There are third parties involved in the recovery process and if the insurance company decides to outsource the recovery then they can use the services of these third parties. They by their professional capacity are in a better position to recover third-party claims than the insurer themselves. 

Since you must be insured anyway, you can find the cheap policy you’ve been looking for. You can get auto insurance rates under $50 per month and you can add-on other coverage types. The stress of the motor insurance claims process is an undesirable consequence is that you will have to deal with. However, adding roadside assistance insurance to your policy, for example, can protect you from huge towing bills and extra stress. Compare various insurance quotes online and find the policy you need.

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