When emergencies like car accidents, medical scares or house fires strike, filing an insurance claim may not be top of mind. But once the dust settles and the bills start pouring in, many consumers are relieved to know that insurance could help protect them against financial losses resulting from these calamities. However, the claims process doesn't always run smoothly.
If, for instance, you forget to submit a key piece of documentation, your loss falls under an exclusion or you use an out-of-network provider, your insurance provider may not cover your losses. Here's a look at strategies for maximizing the chances that your claim will get paid.
Know what's covered. Ideally, you'd be familiar with the ins and outs of your policy before you actually need it, including the amount of any deductibles you are responsible for, how long you have to file a claim and how long the process takes. Knowing this can help you set realistic expectations and choose providers that are likely to be covered (auto insurers may try to steer you toward a certain body shop, but you are not required to use the shop they prefer).
Issues around health care insurance claims often center on whether the medical provider is in-network or out-of-network, according to Martin Rosen, executive vice president, chief marketing officer and co-founder of Health Advocate, an independent health care advocacy and assistance company. In-network doctors have a contracted rate set with your insurance company, so you'll typically pay less out of pocket. "If you go out of network, doctors are able to bill their regular list charges and then to the extent that you've met your deductible and your insurance kicks in, insurance companies only pay what's usual and customary," Rosen explains.
Unfortunately, the in-network issue isn't always clear to the patient.
Understanding your policy is also key with property and casualty insurance, where there's an important distinction between replacement cost and actual cash value for your car, home or possessions. Say a tree falls through the roof of your house and destroys your eight-year-old washing machine. "With a replacement cost policy, the insurance company would pay to replace the old machine with a new one," explains Loretta Worters, vice president of the Insurance Information Institute. "If you had an actual cash value policy, the company would pay only a part of the cost of a new washing machine because a machine that has been used for eight years is worth less than its original cost."
When it comes to destruction from floods, standard homeowners and renters insurance policies do not cover flood damage, but separate flood coverage is available from the federal government's National Flood Insurance Program and a few private insurers.
Keep detailed documentation. Maintain records of all communication with your insurance company, including copies of documents you mail and logs of phone conversations, the date of each call, the name of the person you spoke to and what was said. If you need to appeal a decision, this documentation can prove critical, according to Rosen.
Amy Bach, executive director of United Policyholders, a nonprofit that advises consumers on the claims process, suggests following up on each conversation to create a paper trail. "If you've had a conversation with the adjuster, follow up on it with a short email confirming what's been agreed to and what still remains outstanding," she says. "Make it clear in your communications that you are a proactive consumer, give your insurer proof of your losses and be very specific in asking for the dollar amounts you are entitled to."
Keep receipts for all out-of-pocket expenses such as a hotel stay while your home is being repaired or towing your car to a body shop following an accident.
Here are your options if your claim is denied and you still believe it should be covered:
File an appeal. Once you've exhausted your insurer's internal channels for filing a claim, you can generally appeal with an external review through the government agency that oversees insurance companies in your state. "The insurance company is obligated to provide you with this information, but it might not be in the easiest-to-understand way," Rosen says.
In cases when an insurance company has denied coverage for a medical condition that's considered an emergency, you may be able to apply for an expedited review. Even if it's not an emergency, pay attention to timelines. "Don't ignore things because there are limits on how long you have to appeal [claims], and the clock is running," Rosen says.
Hire a professional. For smaller claims, it may not make financial sense to hire an attorney, advocate or public adjuster to help argue your case. But if large sums of money are at stake or the issue is complex, the math may pencil out. Depending on your state and the size of your claim, you may be able to hire a lawyer on a contingency basis, which means the lawyer "will only get paid if they recover for you, and their fee will be a percentage of what they recover for you," Bach says, adding that good contingency lawyers won't take on cases of less than $50,000 because their fee wouldn't be large enough to make it worth their while.
However, in many cases, consumers can recover losses on their own. "Insurance can be very intimidating," Bach says. "The lingo is confusing to the average person, but if you educate and empower yourself, you get a lot more than you think just by speaking up."
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