How do insurance companies pay out claims?
Insurance companies pay out claims through electronic-fund transfer (EFT) or mail. EFT is the preferred payment method because it’s much faster and more secure than sending claims by mail.
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Michael Vereecke
Commercial Lines Coverage Specialist
Michael Vereecke is the president of Customers First Insurance Group. He has been a licensed insurance agent for over 13 years. He also carries a Commercial Lines Coverage Specialist (CLCS) Designation, providing him the expertise to spot holes in businesses’ coverage. Since 2009, he has worked with many insurance providers, giving him unique insight into the insurance market, differences in ...
Commercial Lines Coverage Specialist
UPDATED: Dec 11, 2023
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Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.
UPDATED: Dec 11, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance provider and cannot guarantee quotes from any single provider.
Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- You can receive car insurance claims electronically and by mail.
- Some insurance companies let you file claims through a mobile app.
- File car insurance claims within three days.
Are you waiting for an insurance company to send a claim check? Car insurance companies pay out claims using different methods, but which one is faster?
Do not worry – we are here to answer your questions about insurance claims.
Our guide explains how to get an insurance claim faster and which insurance companies are the best at paying out claims.
How do insurance companies pay out claims?
Car insurance companies pay claims using various methods. Check out this list to see how insurance companies pay claims to their customers:
- Electronic-fund transfer (EFT). Your insurance company can send you or the repair shop the claim electronically.
- Paper check. A car insurance company may send a paper check by mail when necessary.
- In-person. It’s rare for an insurance agent to give you money in person, but some situations may require cash payouts.
Some claims are paid out directly to you or the repair shop. If you have bodily injuries, you will receive payments as a paper check unless you have given the insurance company your direct deposit information.
Which payment method is the fastest?
EFT is the quickest way to get your claim payout. In some cases, it takes about seven to ten business days to get your claim.
How long does it take for you to receive a car insurance claim?
It should take 45 days or less to receive an insurance claim. The time it takes to receive a car insurance claim varies, but if you file your claim urgently, you can reduce the time it takes to resolve your claim.
When should you file an insurance claim?
You should start the car insurance claim process within 72 hours of an accident. Once a car accident occurs, the statute of limitations starts (a time limit to file a claim for bodily injury or property damage).
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What are the different types of insurance claims?
There are multiple insurance claim types, but the car insurance industry has several. If you are ever in an accident, you must correctly identify what type of claim you want to start.
Here is a list of different types of auto insurance claims:
- Liability car insurance claim. You can file a claim with an at-fault driver’s insurance company.
- Collision car insurance claim. Use this claim when you’re at fault in an accident and need coverage for your damaged vehicle.
- Comprehensive car insurance claim. This claim type is strictly for unforeseen accidents that damage cars, such as flooding, fires, storms, falling objects, and vandalism.
- Uninsured motorist (UM) insurance claim. File a UM claim if the at-fault driver has no insurance or if you’ve been hit or injured by a hit-and-run driver.
- Underinsured motorist (UIM) insurance claim. This coverage claim provides a claim check when the at-fault driver doesn’t have enough on their coverage limits to pay injuries and property damage.
- Personal injury protection (PIP) claims. You can file PIP claims to cover injuries and other medical bills even if you’re at fault in a car accident.
Your insurance rates could increase after a claim is filed. Collision and PIP claims that are not your fault do not drive up your rates, but each insurance company is different.
Which car insurance companies are the best at paying claims?
Most insurance companies do well when paying out claims to customers. One of the best judges for claim payout performance is A.M. Best.
A.M. Best monitors insurance companies’ financial strength, credit ratings, and claim satisfaction (how customers feel about their insurance company). Car insurance companies that perform well in these areas have the highest grades.
But how do the top insurance companies in America perform? Let’s look at the latest A.M. Best ratings to find out.
A.M. Best Ratings of the Best U.S. Auto Insurance Companies
| Car Insurance Companies | A.M. Best Ratings |
|---|---|
| Allstate | A+ (Superior) |
| American Family | A (Excellent) |
| Farmers | A (Excellent) |
| Geico | A++ (Superior) |
| Liberty Mutual | A (Excellent) |
| Nationwide | A+ (Superior) |
| Progressive | A+ (Superior) |
| State Farm | A++ (Superior) |
| Travelers | A++ (Superior) |
| USAA (Military & Family Members) | A++ (Superior) |
Geico, State Farm, Travelers, and USAA are the highest-rated insurance companies. But American Family, Farmers, and Liberty Mutual have weaker A.M. Best ratings. Overall, all companies on the list provide an excellent ability to meet obligations to customer claims.
How do you file a car insurance claim?
If you want to know how to file an insurance claim, you’ll need to follow specific steps to get your payout. Follow the instructions listed below to learn how to file a claim.
- Step One. Contact your insurance company and let them know you need to file a car insurance claim.
- Step Two. Give the representative or agent your name, address, policy number, and driver’s license number to verify your identity.
- Step Three. Choose the type of car insurance claim you need to file.
- Step Four. Confirm the claim with the representative.
- Step Five. Send photos, medical bills, estimates, police reports, etc. to your claim adjuster.
- Step Six. Pay the deductible, if any.
- Step Seven. Wait for the insurance company to send the claim money.
The process may take longer for some insurance companies, but the formula on how to cancel a car insurance policy is similar. Follow up as much as possible to ensure you’re getting the claim you need.
Will I get multiple car insurance claim checks?
It depends on the accident. For example, if you file a liability insurance claim against an at-fault driver for injuries and car damage, you could receive several claim checks for medical bills and repair costs.
And some claim checks are not final. If the extent of your loss gets worse because of a car accident, the insurance company has to cover your expenses up to the policyholder’s coverage limit.
What does it mean when someone files an insurance claim against you?
Do not panic when someone files a claim against your car insurance company. If you are at fault, you want the not-at-fault driver to file a claim with your insurance company.
However, insufficient coverage limits could bring a lawsuit. Your situation may require a lawyer once a matter becomes legal. If you are going to small claims court, it is a matter of proving your case. However, we recommend that you get legal advice from a professional.
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Do car insurance claims cover personal items?
Your insurance company won’t cover personal belongings if they are damaged in an accident or stolen from your car. You will need personal property coverage.
You can get coverage for your personal items if they are damaged or stolen under personal property insurance. However, personal property coverage won’t cover items that you lost.
Make sure you look at your personal property insurance policy closely. If your limits are too low, the personal property insurance option may not cover your belongings.
Case Studies: Insurance Claims Payment Methods
Case Study 1: Fast and Secure Electronic-Fund Transfer
In this case study, John Smith experienced a car accident and filed a claim with his insurance company. He opted for the electronic-fund transfer (EFT) payment method. Within seven to ten business days, John received his claim payout directly in his bank account. The EFT method proved to be the fastest and most secure way to receive his insurance claim.
Case Study 2: Efficient Paper Check Delivery
Samantha Johnson, another policyholder, also had a car accident and filed a claim with her insurance company. She chose to receive her claim payout as a paper check. Although the process took slightly longer compared to EFT, Samantha received her check within the expected time frame of 45 days. The traditional mail delivery method provided a reliable means of receiving the claim amount.
Case Study 3: Direct Deposit for Streamlined Payments
In this case study, Mark Davis sustained bodily injuries in a car accident and required medical treatment. He had previously provided his insurance company with his direct deposit information. As a result, Mark received payments for his medical bills directly into his bank account, eliminating the need for paper checks. The direct deposit option ensured a convenient and efficient payment process.
How Do Insurance Companies Pay Out Claims: The Bottom Line
Most of your claims are paid out electronically or by mail. You can choose to have your claim check sent to the repair shop, the healthcare center, or to you.
But the fastest payment method is electronic-fund transfer. It could take a few days to process, but it is quicker than receiving it in the mail.
On average, it takes up to 45 days for a car insurance claim to finish. However, the right method of payment can shorten the time it takes for you to get your insurance claim.
Check out our article on what to expect when filing a car insurance claim for more details.
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Frequently Asked Questions
How do insurance companies pay out claims?
Insurance companies typically pay out claims in several ways, depending on the type of insurance policy and the nature of the claim. Here are some common methods:
- Direct payment to the policyholder: In some cases, the insurance company may make a direct payment to the policyholder to cover the cost of the claim. For example, if a policyholder has a car accident and has collision coverage, the insurance company may send a check directly to the policyholder to cover the cost of repairs.
- Payment to a service provider: In other cases, the insurance company may pay the service provider directly. For example, if a policyholder has health insurance and receives medical treatment, the insurance company may pay the medical provider directly for the cost of the treatment.
- Reimbursement: In some cases, the policyholder may need to pay for the cost of the claim upfront and then submit a claim for reimbursement. For example, if a policyholder has a travel insurance and needs to cancel a trip due to a covered reason, they may need to pay for the cancellation fees upfront and then submit a claim to the insurance company for reimbursement.
- Third-party payment: If the claim involves a third party, such as in a liability claim, the insurance company may pay the third party directly for damages or injuries.
The process of paying out a claim can vary depending on the insurance company and the type of claim. In general, the insurance company will review the claim to determine if it is covered under the policy and if there are any exclusions or limitations that apply. Once the claim is approved, the insurance company will determine the appropriate method of payment and make the payment accordingly.
What are the different methods insurance companies use to pay out claims?
Insurance companies use electronic-fund transfer (EFT) or mail to pay out claims. EFT is the preferred payment method because it’s much faster and more secure than sending claims by mail. Some claims are paid out directly to the customer or the repair shop, while other payments for bodily injuries are made via paper check unless the customer has provided their direct deposit information.
What is the claims process for car insurance?
The claims process for car insurance involves notifying your insurance company of the accident or incident, gathering information and evidence related to the claim, and working with the insurance company to get your car repaired or replaced and any medical bills paid. The process can vary depending on your insurance company and the specifics of your claim.
How much car insurance coverage do I need?
The amount of car insurance coverage you need depends on a variety of factors, including your state’s minimum coverage requirements, your driving habits and risks, the value of your car, and your financial situation. It’s important to speak with an insurance agent to determine the right amount of coverage for your specific needs.
What is a deductible in car insurance?
A deductible is the amount of money you agree to pay out of pocket before your insurance company begins to pay for any damages or injuries covered by your insurance policy. For example, if you have a $500 deductible and you cause an accident that results in $1,000 in damages, you would pay the first $500 and your insurance company would pay the remaining $500.
Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Michael Vereecke
Commercial Lines Coverage Specialist
Michael Vereecke is the president of Customers First Insurance Group. He has been a licensed insurance agent for over 13 years. He also carries a Commercial Lines Coverage Specialist (CLCS) Designation, providing him the expertise to spot holes in businesses’ coverage. Since 2009, he has worked with many insurance providers, giving him unique insight into the insurance market, differences in ...
Commercial Lines Coverage Specialist
Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.