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How Long Does an Insurance Company Have to Investigate a Claim?

Insurance companies typically have a reasonable amount of time to investigate a claim, which can vary depending on the circumstances of the claim and the laws of the state. In general, insurance companies are expected to conduct a prompt and thorough investigation. However, there is no specific time limit set by law for how long an insurance company has to investigate a claim.
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What is an Insurance Claim?

A claim with an insurance company is a formal request made by the policyholder for coverage or compensation due to a covered loss or event outlined in the policy. The insurer then assesses the claim for validity and either approves or denies it. Upon approval, the insurer disburses payment to the policyholder or an authorized party acting on their behalf.

Insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams, according to Investopedia [1]. In some cases, a third party is able to file claims on behalf of the insured person.

While there are instances where a third party can file a claim on behalf of the policyholder, typically only individuals listed on the policy are eligible to receive claim payments.

What Does it Mean When Your Insurance Claim is Under Investigation?

According to the Case IQ, insurance companies frequently initiate claims investigations to assess the validity of a claim. This process assists the claims adjuster in making an informed decision regarding the claim's handling [2].

Insurance claims investigations are used to combat the prevalence of false or inflated claims. An illegitimate claim is unjustifiable or inaccurate, and by identifying it early you avoid paying potentially significant costs to a fraudster - stated CaseIQ

These investigations depend on evidence, interviews, and records to determine the legitimacy or illegitimacy of a claim.

How Long Does Insurance Claim Investigations Usually Take?

Insurance policies serve as contracts with detailed guidelines for all involved parties. These contracts outline specific rights, requiring insurance companies to act fairly, reasonably, and promptly. However, they also grant insurers the authority to conduct thorough investigations.

According to John Foy, insurers must acknowledge receipt of a submitted claim within 15 days, but this does not mandate a decision within that timeframe. Following acknowledgment, insurers have 15 days to investigate the claim and 40 days in total to settle the claim from the initial submission [3].

Why is My Claim Taking Longer?

Delays are not uncommon in insurance processes, and the 15-day investigation period can feel prolonged, particularly when there is little communication from the insurer or repeated requests for additional information. Certain circumstances, such as multiple claims or legitimacy concerns, can extend the processing time beyond the usual duration.

What if I Disagree With the Insurance Company's Decision?

If you're not satisfied with the insurance adjuster's decision, there are steps you can take. You can provide additional information for the adjuster to reconsider, request a review by a supervisor, send a formal demand letter to the insurer, or initiate formal legal action.

Insurance Fraud Statistics

  • Insurance fraud causes $308.6 billion worth of damage to consumers in the US.
  • 78% of American citizens worry about insurance fraud.
  • The insurance industry comprises 7,000 organizations in the US alone.
  • Insurance scams cause $29 billion of damage to auto insurers annually.
  • Roughly 85% of insurers have dedicated investigation teams.

According to Legal Jobs [4].

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If you have been affected by any of these matters, feel free to contact a personal defense attorney that can help.

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References:

1. https://www.caseiq.com/resources/insurance-claims-investigations-detecting-fraud-and-abuse/
2.https://www.investopedia.com/terms/i/insurance_claim.asp
3. https://www.johnfoy.com/faqs/how-long-does-an-insurance-company-have-to-investigate-a-claim/
4. https://legaljobs.io/blog/insurance-fraud-statistics