What Happens During an Insurance Claim? A Behind-the-Scenes Guide for New Agents

What Is FNOL and Why Does It Matter?

First Notice of Loss (FNOL) is the initial report a policyholder makes to their insurance company after a covered incident occurs. This could be a car accident, a house fire, a theft, a medical event, or any other loss covered under their policy. The FNOL is the starting gun for the entire claims process, and the quality of information provided at this stage directly impacts how quickly and accurately the claim moves forward.

During an FNOL report, the client typically provides their policy number, the date and time of the incident, the location where it occurred, a description of the damage or loss, a police report number if applicable, and contact information for any other parties involved. Most insurance companies accept FNOL reports by phone, through a mobile app, or via an online portal.

As the agent, you may or may not be involved in the actual FNOL submission. Some clients call you first, especially if they have a strong relationship with you, while others contact the carrier directly. Either way, your value at this stage is helping the client understand what information they need to provide, setting expectations for what happens next, and confirming that the report has been received and a claim number has been assigned.

State insurance departments regulate claims handling practices. The National Association of Insurance Commissioners (NAIC)Sites Default Files Model Law 900.pdf Content.naic.org has established a model Unfair Claims Settlement Practices Act that most states have adopted in some form. This framework requires insurers to acknowledge claims promptly, investigate in good faith, and communicate clearly with policyholders throughout the process.

What Happens After a Claim Is Filed?

Once the FNOL is received, the insurance company initiates a structured process to investigate, evaluate, and resolve the claim. Here is how that process typically unfolds.

Step 1: Claim Assignment

After the FNOL is logged, the insurance company assigns the claim to a claims adjuster. The type of adjuster depends on the complexity and nature of the loss. Staff adjusters are employees of the insurance company who handle claims as part of their regular duties. Independent adjusters are contracted by the carrier to handle overflow or specialized claims. Catastrophe (CAT) adjusters are deployed during large-scale events like hurricanes, wildfires, or floods to handle the surge in claims volume.

The adjuster becomes the primary point of contact for the claims investigation. They are responsible for evaluating the loss, determining coverage, and ultimately recommending a settlement amount.

Step 2: Investigation

The adjuster investigates the claim by gathering evidence, reviewing the policy terms, and determining the facts of the loss. This may include inspecting damaged property, reviewing police or fire reports, interviewing the policyholder and any witnesses, consulting with experts such as engineers or medical professionals, and examining photographs or video of the damage.

The investigation stage is where the adjuster determines whether the loss is covered under the policy, the extent of the damage, and whether any exclusions or limitations apply. For straightforward claims, this might take a few days. Complex claims involving liability disputes, large commercial losses, or multiple parties can take weeks or months.

Step 3: Reserve Setting

Based on the initial investigation, the insurance company sets a reserve for the claim. A reserve is the estimated amount the insurer expects to pay for the loss. This figure is used internally for financial planning and regulatory compliance, and it is adjusted as more information becomes available.

Reserves are not the final settlement amount. They are an estimate that helps the insurance company manage its financial obligations. As the investigation progresses and additional information emerges (repair estimates, medical bills, expert reports), the reserve may increase or decrease accordingly.

Step 4: Evaluation and Settlement

Once the investigation is complete, the adjuster evaluates the total loss and prepares a settlement recommendation. For property claims, this is typically based on repair estimates, replacement cost calculations, and any applicable depreciation. For liability claims, the evaluation factors in medical expenses, lost wages, pain and suffering, and legal considerations.

The settlement offer is presented to the policyholder. If the policyholder agrees, payment is issued according to the policy terms (minus any applicable deductible). If the policyholder disputes the amount, a negotiation process may follow. In some cases, disputes are resolved through appraisal, mediation, or litigation.

Step 5: Closure

After the settlement is paid and all obligations are met, the claim is closed. The insurer documents the final outcome, releases any remaining reserves, and updates the policyholder's claims history. Some claims may be reopened if new information surfaces or if additional damages are discovered.

What Is the Agent's Role During a Claim?

You are not the adjuster. You are not processing paperwork or approving payments. But your role during a claim is arguably more important than any of those functions, because you are the person your client trusts.

Be the first call. When something goes wrong, clients want to hear from someone they know. Even if you cannot process the claim yourself, being available to answer questions, explain the timeline, and provide reassurance is enormously valuable. This is where the interpersonal skillsPre License What Skills Do You Need To Become An Insurance Agent Resources you develop early in your career pay off.

Help with the FNOL. Walk your client through what information they need to report. Remind them to document the damage with photos and video, preserve any evidence, and avoid making repairs before the adjuster has inspected the property (unless emergency mitigation is necessary to prevent further damage).

Set realistic expectations. Clients often have no idea how the claims process works. They may expect a check within days for a claim that will take weeks. Your job is to explain the typical timeline, describe what the adjuster will do, and let them know what to expect at each stage.

Follow up consistently. Check in with both the client and the claims department throughout the process. If there are delays, find out why and communicate the reason to your client. If you sense the claim is not being handled fairly, escalate it through the appropriate channels.

Advocate when necessary. If your client receives a settlement offer they believe is too low, you can help them understand their options, which may include requesting a re-inspection, providing additional documentation, or initiating the appraisal process outlined in their policy. You are not a public adjuster or an attorney, but your knowledge of the policy and the process positions you to be a credible advocate.

Understanding what agents doPre License What Does Insurance Agent Do Resources on a daily basis helps you see how claims support fits into the broader scope of your responsibilities.

What Are Common Reasons Claims Get Delayed or Denied?

Not every claim goes smoothly. Understanding the most common issues helps you prepare your clients and protect the relationship when complications arise.

Incomplete FNOL information. If the initial report is missing key details, the adjuster will need to follow up before the investigation can proceed. This is one of the easiest delays to prevent by helping your client provide thorough information upfront.

Coverage disputes. Sometimes the loss falls outside the scope of the policy. Common examples include flood damage on a standard homeowners policy (which typically requires separate flood coverage), wear-and-tear issues that are excluded under most property policies, or incidents that occurred before the policy's effective date.

Liability disagreements. In auto and liability claims, determining who is at fault can be complicated. When multiple parties are involved or when witness accounts conflict, the investigation takes longer.

Documentation gaps. Claims require supporting documentation: repair estimates, medical records, receipts, police reports. If the client cannot provide these in a timely manner, the process stalls.

Fraud investigation. If the insurer suspects the claim may be fraudulent or exaggerated, a more thorough investigation is triggered. This is uncommon for most clients but adds significant time when it occurs.

Your role in all of these situations is to keep the client informed, help them provide whatever documentation is needed, and manage their expectations without overpromising outcomes.

How Does Claims Knowledge Help You Grow Your Career?

New agents sometimes treat claims as something that happens "over there" in the carrier's claims department. But the agents who build the most successful, long-lasting careers are the ones who understand claims deeply and use that knowledge to strengthen their client relationships.

When you help a client navigate a difficult claim, you create a level of loyalty that no marketing campaign can match. That client is going to renew their policy with you. They are going to refer their friends, family, and colleagues. They are going to remember that you were the person who showed up when it mattered most.

Claims knowledge also makes you a better salesperson. When you understand what is and is not covered, you can have more informed conversations during the policy review process, identify gaps in coverage before a loss occurs, and recommend endorsements or additional policies that genuinely protect your client. This consultative approach is what separates trusted advisors from transactional agents.

For agents interested in deepening their understanding of different coverage types, reviewing the full landscape of insurance productsPre License Your Complete Guide To Insurance Types And Career Opportunities Resources and how each one handles claims provides a strong foundation.

Some agents find that claims exposure leads them toward related career paths, including becoming a claims adjuster, moving into underwriting, or specializing in risk management. The P&C licensePre License Is Becoming A Licensed Property And Casualty Insurance Agent Worth It Resources that gets you started as a sales agent also opens doors to these adjacent roles within the industry.

Key Claims Terms Every New Agent Should Know

FNOL (First Notice of Loss): The initial report of a loss to the insurance company. This triggers the claims process.

Adjuster: The professional responsible for investigating the claim, evaluating damages, and recommending a settlement. Adjusters may be staff employees of the carrier, independent contractors, or specialized catastrophe adjusters.

Reserve: The estimated amount the insurer sets aside to cover the anticipated cost of a claim. Reserves are updated as the investigation progresses.

Subrogation: The process by which an insurance company recovers money from the party responsible for a loss after paying the policyholder's claim. For example, if your client's parked car is damaged by another driver, the insurer may pay the claim and then pursue reimbursement from the at-fault driver's insurance.

Deductible: The amount the policyholder pays out of pocket before insurance coverage applies. For example, if a homeowner has a $1,000 deductible and incurs $10,000 in covered damage, the insurer pays $9,000.

Actual Cash Value (ACV): The replacement cost of damaged property minus depreciation. ACV settlements account for the age and condition of the item at the time of loss.

Replacement Cost Value (RCV): The cost to replace damaged property with a new item of similar kind and quality, without deducting for depreciation. RCV policies generally provide more favorable claim outcomes for the policyholder.

Proof of Loss: A formal, sworn statement submitted by the policyholder documenting the facts and the amount of the claimed loss. Some policies require a proof of loss within a specific timeframe.

Build Your Claims Knowledge with Aceable Insurance

Understanding the claims process is part of what makes you a complete, competent insurance professional, and it starts with a strong education foundation. Aceable Insurance's state-approved pre-licensing courses cover the policy structures, coverage types, and regulatory frameworks that underpin everything you will encounter in the claims world. With mobile-friendly coursework, built-in exam prep, and expert instructor support, Aceable prepares you to pass your licensing exam and step into your career with confidence. Start your path to successPre License Tips Becoming A Successful Insurance Agent Resources today.