What Is a Fair Time Frame for Insurance Claims?

Until your insurer handles your claim to its conclusion and makes at least a partial payment, your life can get stuck on hold. Many states have specific time frames that insurers operating there must adhere to when handling and settling claims. These laws protect consumers from unreasonable and unnecessary delays that could negatively impact their lives.

There are no universal laws that govern how long insurance claims are supposed to take. Each state makes its own laws. A single insurance company that operates in multiple states can have a different claims time frame in each state. In general, state laws require claims to be acknowledged, settled and paid within a prompt and reasonable set of time. Some states define specifically what constitutes a legal time frame while others leave it to insurers' interpretation.

When you file a claim, the insurance company must acknowledge that it received your claim by making contact with you and assigning you an adjuster. Kentucky is one state that has separate time frames depending on how you file your claim. If you do so electronically, the insurance company must acknowledge you within 48 hours. Traditional notifications, like by mail, must be acknowledged within 20 calendar days. The acknowledgment must state whether the insurer requires additional information to begin the claim.

States generally have two guidelines when it comes to settling claims. Insurance companies must either accept the claim or deny it in whole or in part, within a certain period of time. If the circumstances of the claim require longer than this time, the insurer must communicate with the customer within that initial time frame about the reasons for the delay, and must settle the claim before the extension expires. In Kansas, for example, the claim must be settled within 30 days with 45-day extensions as needed.

Once you and your insurer reach a settlement agreement, it must pay you within a final time period specified by the state. The general guideline in California is 30 days after settlement is reached. Florida places no prompt payment requirement on final replacement cost home insurance claims as of legislation dated May 2011. Some states, like South Carolina, only define this final period as a "reasonable" time. In many cases, insurers issue payment in much less time than the law allows.

Using California's legal time frames as an example, a straightforward claim with no unusual negotiations, litigation or investigation can take up to 85 days to be acknowledged, settled and paid under the law. However, many insurers pride themselves on handling claims quickly, and often claims can be closed within just a few days.