What an insurance claim is, the process of an auto insurance claim, and what to do if there’s a problem with your auto insurance claim.

Insurance is nothing without claims.

Much can be said about the various nuances of insurance, but ultimately it all boils down to one thing: claims. Without claims, or at least the possibility of claims, there is no point to insurance. It is therefore an exceedingly important subject to consider when discussing any insurance topic.

Property and casualty insurance companies fully expect to spend two-thirds of their revenue on claims. They are required by law to keep large amounts of money on hand in reserves for the purpose of paying claims.

Claims are a big deal for any insurance company, auto insurance or otherwise; any company that doesn’t take claims seriously should be regarded with immediate suspicion.

Simply put, a claim is a notification of loss made by an insured to the insurance company. The insurance company then investigates the claim and assuming the claim is legitimate indemnifies the insured for the loss per the terms of the policy. It’s pretty straightforward, but there are certain steps that need to be taken to get to that all-important claim check.

The Auto Insurance Claims Process

Instructions to contact your insurance company are located on your auto insurance card you should carry in your vehicle at all times. Some companies will have you contact your agent, while others provided dedicated claims phone services. Contact your company as soon as possible after an accident.

Provide all the facts you can about the accident, including time, date, what vehicles were involved, extent of damage, if there were any injuries and if any law enforcement was called on the scene. Don’t worry if you can’t remember all that, the agent or claims representative will be able to help you.

Once the claim is reported it is assigned to a claims adjuster. The adjuster is either an insurance company employee or a contractor who specializes in investigating claims. A claims adjuster is never an agent. Indeed agents often have no direct contact with the claim itself after the initial report. Keep in contact with the adjuster for up to the minute reports. In addition, some companies now offer a special service that allows you to keep track of your vehicle while it’s being repaired.

After any deductibles the claim is paid in one of two ways, either directly to you as a cash payment or in services performed by the repair or auto body shop. Either way, the payment must be approved by the adjuster before the insurance company authorizes payment. Of course, if a cash payment is made the insurance company won’t pay to have the car fixed. You’re on you’re own with that.

Handling Disputes

If you are unable to resolve disputes with your adjuster, you can hire a third party adjuster for a second opinion of the damage. Lawyering up and going to arbitration or court should only be done in extreme cases after all other avenues are exhausted.

While a claims adjuster necessarily works for the insurance company, a good adjuster will work with you to give you the best claim settlement possible. Don’t be afraid to ask questions and check up on the work done throughout the process.

Insurance marketing has migrated away from strictly selling through agents to marketing to the masses.

Insurance companies employ many marketing ploys to get you to remember them.

Marketing for any company is very important. If you are in a highly competitive field like insurance it is not only important, it is vital. There are so many insurance companies out there for people to choose from that if a company is not participating in insurance marketing, they will not survive.

For an insurance company to survive they have to constantly change the way they market themselves to get their name out there in front of you. Not only that, but they also have to get you to remember their name.

The Basic Premise

The base premise of insurance marketing now is to get your name out there into the public. If people don’t know who you are, they aren’t going to try and get a quote from you. No quotes mean no business.

Some insurance companies still rely heavily on independent insurance agents to sell their insurance as their only means of marketing. These are usually small insurance companies whose sales will remain small if they continue to do this.

The insurance companies that have made their way to the Fortune 500 list with their company size and revenue are the ones that are actively advertising their presence as an insurance company. They are engaged in effective advertising campaigns so that you will remember them. They are also putting their names on sports complexes, race cars and sponsoring high profile events to get their name out there.

Insurance Mascots

Mascots for teams and other companies have been around for a very long time. They are the symbol that sticks in the heads of people (anyone remember “Avoid the Noid” from Domino’s Pizza?) to get them to remember a company.

They also create a figure that people have an easier time psychologically supporting. Just ask yourself if you see the Walt Disney Company as a huge international corporation or the makers of Mickey Mouse?

We can rally behind the company with passion and smiles when we think of Mickey and all of the other characters. But, when you start to think that it is just a huge company with the goal of separating us from our money, the good feelings start to go away.

In the field of insurance the GEICO Gecko, Flo from Progressive and Mayhem from Allstate are the top three recognized mascots in the insurance industry right now. These are figures that help people remember the insurance companies they represent.

How many of you would have been able to remember GEICO without that gecko with the accent?

Agents

Insurance agents used to be the primary insurance marketing avenue that companies took. The agents were located in local markets and it was their job to sell, sell, sell.

Today, agents still sell insurance and are a good portion of insurance marketing, but they are no longer the only source. The internet made a huge change to the way that insurance is marketed as people can now go online, get a quote and purchase their policy right from their home.

Now companies are finding themselves having to step up their own advertising to get their name out there in front of the people that are getting their own insurance without an agent.

What underwriting is, why statistics drive it, how computerized underwriting streamlines the auto insurance buying process, and why underwriting fosters auto insurance competition.

Let computers do the underwriting. Life is less stressful. Really.

As with everything else, auto insurance has rules. One has to follow those rules in order to get the right policy issued to the right driver and the right vehicle to ensure both proper coverage and to keep the insurance company in the black at the same time.

But what are the rules?

This is a question that can confound even the sharpest of minds. Fortunately there is a method to know how the game is played: underwriting.

In a general sense, underwriting refers to the qualifying and pricing rules insurance goes by. Underwriters work in all forms of insurance: homeowners insurance, life insurance, renter’s insurance, commercial general liability insurance, you name it.

For auto insurance underwriting is dependent on literally thousands of variables regarding the auto, the driver and the conditions the auto is driven under, such as miles driven to work each day. All of these factors and more can not only determine if the auto and driver qualify for a policy to begin with, but also how much the premium will be.

Statistics Rule in Underwriting

Auto insurance underwriting is driven by statistics. The basic premise behind auto insurance pricing is that groups which cause the most accidents should pay the most in premium, while safer groups should pay less.

These experiences vary from company to company, but for the most part insurance companies agree that teenage drivers cost more than their older counterparts. Also,  Women are slightly less expensive to insure than men and people with tickets and claims cost more to insure than those with clean records. Insurance companies employ actuaries to crunch the numbers and back these claims up with hard facts.

Underwriting Goes Digital

Despite often complex variables, many auto insurance carriers are moving away from human underwriters and relying more and more on automated underwriting to allow for quicker policy issuance. In the past agents temporarily bound coverage when an application was written with final approval, or policy issuance, coming only when the policy was approved by an underwriter at the home office.

Today many auto insurance companies will issue a policy on the spot thanks to computerized underwriting systems, sending an application to an underwriter at home office only if a particularly unusual circumstance is encountered.

Computerized auto insurance underwriting takes the guesswork out of auto insurance applications, which saves both insurance agents and customers a lot of grief. Customers know that their policy is issued and in force before they walk out the agent’s office, and agents don’t have to go back days or even weeks later to tell a customer their policy was turned down by underwriting, something agents dread more than just about anything in the business. If there are problems, it’s known right away.

Different Companies Use Different Underwriting

Not all insurance companies are created equal, and some companies look at the business with very different mindsets. For example, a standard insurance company will underwrite very differently than a high-risk insurance company, and a specialty car insurance company will underwrite even more differently than their mainstream counterparts.

This is why price can vary widely for the same driver and the same car from company to company; different companies consider different things in their underwriting. Because underwriting is by no means uniform across the industry, it pays to shop around.

What property and casualty insurance is, the history of property and casualty insurance in general and auto insurance in particular, and how it all ties in to save you money.

Benjamin Franklin. Your Founding Father ... of insurance!

Your local auto insurance agent is probably what’s referred to in the insurance industry as a “property and casualty,” “P&C,” or “multi-line” agent. What does that mean, anyway?

Well, it means that he or she sells and services more than just auto insurance. While there’s plenty to write about auto insurance (and believe us, we’ve proven it), it’s just the tip of the iceberg when it comes to the larger insurance realm.

Auto insurance is part of a larger group of insurance types, or “lines” as they’re known in the industry, known as property and casualty or P&C. Other forms of property and casualty insurance include homeowners, renters and most commercial and general liability insurances.

Most states require a special type of insurance license to sell and service property and casualty insurance. Because most large auto insurance carriers are multi-line companies, they require their agents to be property and casualty generalists as opposed to auto insurance specialists.

A Short History of Property and Casualty

Crude forms of property and casualty insurance can be traced all the way back to Hammurabi’s Code in ancient Babylonia. Actuary tables developed by Blaise Pascal were in use in Europe in the 1600s. Property and casualty insurance in America can be traced back to 1752 Philadelphia, when a group of property owners banded together to form the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. The prime mover in this organization? None other than Benjamin Franklin, who later had a hand in forming the first life insurance company in America as well.

In addition to forming the precursor to homeowners insurance and therefore the beginnings of property and casualty insurance in America, the Philadelphia Contributionship also pioneered underwriting techniques by refusing to insure houses that were considered unacceptable fire risks (and in 18^th Century Philadelphia, there were a lot of those) as well as ushered in some of the country’s first zoning ordinances and building codes.

The History of Auto Insurance

Auto insurance, of course, came a bit later in our history with the advent of the automobile itself. The first recorded auto insurance policy was written by Travelers in 1897 for Dayton, Ohio, resident Gilbert J. Loomis. Loomis paid a cool $1,000 – a fortune in 1897 – for a policy that covered only property damage, bodily injury or accidental death. In other words, a liability only policy.

Auto insurance began to assume its modern form in the 1920s with the formation of companies like State Farm in Illinois and Farmers in California, both founded on the premise that farmers were safer drivers than the general population. Although harder statistical data is used today, the same basic concept that some groups are cheaper to insure than others remains a central tenet of auto insurance marketing and pricing.

How It’s Related

Underwriting in all property and casualty lines is driven by statistics. What’s more, auto insurance discounts are often available by purchasing other property and casualty products from the same company. These “package discounts” are often a great way to get cheaper car insurance. Ask your agent for more details.

Insurance offers us financial protection and stability in the event of an accident; it is not the unnecessary evil that some people make it out to be.

Without insurance, you would have to use the money in your nest egg to pay for accidents.

If the word insurance had fewer letters it would be classified as one of those bad four-letter words by most. People hate insurance, they don’t want to buy it and most feel it is a legal scam. But, the idea of insurance is not the evil entity that it is made out to be.

It is bad-intentioned people that give insurance its bad reputation. Just like the saying “Guns don’t kill people, people kill people”.

Few people understand what insurance really is, how it protects them and also that it has a long rich history of our ancestors voluntarily creating it. All they see is that they are required to have it and it is another bill that they have to pay.

What is Insurance?

Insurance is defined in technical terms as the transfer of risk from one party (you) to another party (insurance company) in exchange for money.

Okay here is that definition in plain English: You are paying the insurance company to accept the responsibility of paying for any damages that may be caused to your vehicle or by your vehicle. Of course, what the insurance company pays for depends on the insurance coverage that you buy.

What Are the Benefits of Insurance?

Insurance protects people from financial destruction. This is the only reason to have insurance and is the only reason that it was created.

You purchase insurance on your vehicle so that the insurance company will pay for the large bills that result from an accident. Bills for things like car repairs and seeking medical treatment.

These bills can get to be so big that you most likely can’t afford to pay them. If you had to pay for these bills out of your own pocket, you would lose everything that you owned and be in debt for the rest of your life.

On the other side, insurance also financially protects the people that you do damage to. Because your insurance company pays to repair the other person’s vehicle and their medical bills, they don’t have to try and come up with the money themselves or wait for you to pay it.

Without insurance protection you are putting not only yourself at risk of financial ruin, you are also risking the financial stability of others.

Where did Insurance Come From?

Insurance was first created to protect companies in the shipping business. Merchants got together and put up money to protect cargo while it was in transit to where it was to be sold. The first record we have of this is from China.

Insurance today is still used in the same way by businesses, but has become a business field of its own. Like any other field, companies expand and look for new products to sell to the public. This is why we now have so many different types of insurance available to us.