How Long Does My Insurance Have to Pay Out My Claim After We’ve Agreed on a Price?


The hard part in any insurance negotiation is coming to an agreement on the value of the claim. You’ll start at a higher number and the insurance company will counter. You’ll go back and forth a few times before finally settling on a number. When you finally reach an agreed-upon price, you might expect to receive a check right away. In reality, you may have to wait a while. The insurance industry is notoriously slow, with red tape making it difficult for people to get the money they are due. The brings up an interesting question. Just how long does your insurance have to pay out after you’ve reached that agreement?

Long waits are characteristic of the claims process
You can expect to wait for many weeks to resolve the different levels of the claims process. There is documentation to send in. There are periods where adjusters have to come out to assess the claim. You may have lawyers going back and forth over some of the details of what the insurance company has promised to cover and what they have not. With this in mind, you can expect the longest wait to happen in the beginning. Once this period is finished, insurance companies are compelled by law to pay out claims relatively quickly. This won’t stop them in many cases from unnecessarily delaying the process, however.

Insurance payout grace periods
Because state governments understand that people who file insurance claims need their money in a pinch, there are requirements that insurance companies pay out within a statutorily defined period. While the specific time frame will different depending on the state, insurance companies will generally have either 30 or 45 days. If your insurance provider takes more than 60 days to issue a check, then there can be legal ramifications for that delay.

The law imposes not only penalties, but also interest whenever an insurance company fails to make a payout in the required period of time. You may have to file a lawsuit to recover this additional money, however, which can be quite expensive. Whether or not it is worth your effort to go after the delinquency interest will depend on how big your insurance claim is. Bigger claims lead to bigger financial rewards based on interest.

How to handle an insurance payout delay
Delays in insurance payouts can constitute either a break of contract or fraud. An insurance lawyer should be retained to file a lawsuit on your behalf. That lawsuit will allege that the insurance provider breached its settlement agreement. In the alternative, it will allege that the insurance provider is committing fraud by refusing to pay out the claim. Judges can enter ruling and even direct what is known as specific performance. They can force insurance companies to pay out the claim in a short period of time.

Special provisions for life insurance
The rules fleshed out above relate to auto and home insurance, which are the two most common insurance claims. Life insurance has different rules, with most states giving insurance companies a 90-day period to pay out the lump sum. Likewise, you may have elected to receive your payments in an annuity, which will have its own rules by contract that govern the payments.