Insurance Questions: Documenting a claim

Editor’s note: Insurance Questions answers questions about insurance coverage for equipment rental businesses. Email your insurance questions to Answers are provided by ARA Insurance, Kansas City, Mo. For more information, call 800-821-6580 or visit

Q: Why do I need to provide documentation to support my insurance claim?

A. An insurance policy is a contract between the insurance company and the policyholder. The company’s claim representative must verify that the loss being claimed falls within the conditions and circumstances outlined in the policy.

When payments are made on losses that do not fit the policy’s terms, premium has not been collected to cover those losses. The insurance company must substantiate payments to ensure solvency.

In addition, several legal principles apply to the insurance contract:

  • A policyholder must directly suffer from a loss.
  • Insurance can only compensate up to the policyholder’s interest.
  • The insurance company has a right to pursue recoveries of claim payments from responsible parties.

To support the decision to make a payment, the claim representative must collect documentation of the cause of the loss, the property involved, the cost to repair or replace damaged property, and the policyholder’s and other parties’ legal responsibilities. That documentation could include police and fire reports, photos, purchase receipts, inventory lists, repair or replacement estimates, and the rental contract.