Insurance Policies - Costs Keeping the Costs Down On the cost side, the big expense for insurance policies is, of course, the business of claims and damages. At the end of the day, claim payment is what customers contract for and expect per the terms of their insurance policies. The claims, when the given loss occurs, are submitted to the insurance provider and reviewed for accuracy and eligibility. When all the criteria is met, the insurance providers has to pay out the claim as agreed. Insurance providers spend quite a bit of their operating cost on administrative units that review claims. Again, if the claim is found to be inaccurate or not within the coverage terms of the insurance policy it is related to, the provider can deny or reduce the claimed loss coverage. So a lot of effort is spent within provider companies to weed out these potential savings. Where a loss or claim is not very specific, then evaluations take place to determine the market value and recovery value allowed for the given loss. By keeping a close watch of these areas, insurance providers can protect their own interests while still honoring their agreements made. Where things get dicier with insurance coverage is when it involves a claim or loss payout to a third party who was never part of the insurance policy terms. The injured party may have an impression of loss and needed recovery that far exceeds what the insurance provider is required and/or willing to pay. Enter the lawyers. While the tort litigation can easily go after the party that actually caused the damage, it’s well accepted that doesn’t result in large payouts. The insurance company covering the causing party tends to be seen as the fat wallet that lawyers aim for in legal cases. Obviously, the goal of the insurance provider in all areas is to keep costs down as much as possible to maximize profit. But customer service and claim control has to be addressed as well. As if to complicate matters further, then there is the issue of insurance fraud. This crime occurs when a party takes advantage of the terms of a policy and falsely files a claim for damages that haven’t occurred. It can also occur when a third party tries to assert a loss against an insured recipient when no loss has occurred in reality. A great example of the third party fraud is when people jump onto a bus stuck in a traffic accident and then claim they were riders and were injured, seeking damages. Insurance fraud drains resources from insurance providers both in litigation costs, investigations, and ultimately erroneous payouts that get through. It is also a crime and felony punishable by jail-time and fines.