Benefits are the amount paid by an insurance company to the insured after a claim has been successfully filed. Benefits are one of the most important aspects of a car insurance policy, as they’re fundamental to the idea of insurance. In car insurance, benefits are limited by a driver’s car insurance limits and deductibles and possibly by other factors.
To understand car insurance benefits, it’s helpful to know how a claim is processed. After a driver is involved in an accident, he or she makes an insurance claim and provides information that backs up the claim. This can include pictures from the scene of the accident, pictures of the damage incurred by a car, repair and hospital bills, and testimony from law enforcement officials or other individuals at the scene of an accident that can corroborate the driver’s account of the accident. The driver needs to show that the accident was not his fault or that the benefits requested in a claim are justified.
All of this information is given to a claims adjuster, who interprets the information and decides whether or not the driver’s claim is correct and how much money the policyholder (or any other parties involved in an accident) is entitled to. The claims adjuster is legally required to make a decision about benefits within a set amount of time, determined by that state’s insurance law. After a decision has been made, the insurance company pays out the adjusted amount of the claim to the policyholder. Before car insurance benefits can be paid, the insurance policy holder will have to pay a deductible, which varies depending on the car insurance policy. A payout may be limited by a policy’s limits. For instance, if a driver sustained $2,000 worth of damage in an accident but only had coverage of $1,000, the insurance company would only pay out the maximum coverage amount of $1,000. If the driver also had a deductible of $500, the driver would have to pay $500 before receiving $1,000. Benefits may also be restricted by exclusions built into a policy and by state law.
As benefits are determined by car insurance limits and the types of coverage that a driver purchases, a driver should consider potential benefits when purchasing a policy. Adjusting the coverage limits and deductibles of a policy will change the benefits of a future car insurance claim, so drivers should carefully consider their limits for each area of a car insurance policy, including liability coverages, collision coverage, personal injury protection and any other types of insurance coverage on a policy.