How insurance claims work
Life is full of risks and in order to manage those risks, people tend to protect themselves by obtaining insurance coverage which allows them to transfer their financial losses to another party in exchange for a premium.
The losses can arise from unforeseen circumstances such as fire, theft, flood, medical condition etc. In order to limit those losses people buy insurance which is a legally binding contract. The contract describes the nature of the insurance (auto, home etc) and the responsibilities, limitations and obligations of the insurance company.
When a person suffers losses which have been defined in the policy, he/she is entitled to file for claim, which documents the loss in detail and the subsequent worth attached to it. In return, the person will be reimbursed or will be provided coverage for the maximum amount of the policy.
However, in order to ensure that the process pans out smoothly, the victim or the insured person must assist the insurance company by providing details of the incident and must prove that the damage was not caused due to his or her own negligence. The company then evaluates the damage by comparing previous cases and assigns a value to that claim. If an ambiguity exists, and the claim is not provided, the insured person is entitled for settlement or may defend himself or herself via a court trial.
The insurance policy can be obtained by an individual or can be in the form of a pool insurance where large companies purchase insurance policies on behalf of the whole organization. An insurance policy may be available for all sorts of potential risk situations.