The Debit Card’s in the Mail – A Modern Claim Settlement Solution

iStock_000016665895XSmallBefore you get the wrong impression from the title, just know that insurance companies are not settling claims by charging it on plastic. Nor should you be doing such a thing. Instead, some companies are testing out the feasibility of giving homeowners debit cards to use when settling their property damage claims. The normal claim process can be quite lengthy and tedious and homeowners with damaged homes are often anxious to get started with repairs. Therefore, the idea of providing policyholders with debit cards to speed up the claims payment process has started to get some real traction in the industry.

In a traditional insurance claim, homeowners with damaged property need to wait for the insurance company to mail them a check. Unfortunately, these checks can take several days to arrive and mail can be spotty. For example, if you were in an area damaged by a natural disaster, it’s possible that your whole neighborhood was destroyed and inaccessible. Even the most intrepid mail carrier would have difficulty delivering a check to a disaster area. Compound that complexity with the fact that you might not want to visit a disaster area on a daily basis just to wait for a check that might not arrive.

The use of a debit card can help eliminate some of the problems associated with waiting for a check. Instead of sending multiple checks throughout the lifetime of a claim, the insurance company can just reload your debit card with additional funds as they are approved. This can be very helpful to homeowners who also need alternate living arrangements and can use the debit card to pay a hotel directly. Otherwise, the homeowner would have to deposit a check (which sometimes might have a bank hold placed on it) and then wait for the funds to clear, all while hoping to be able to find a hotel or apartment on limited resources.

According to Property Casualty 360, a company has just been awarded a patent for a special type of debit card to use for insurance claims. So far, this type of card has been used to pay over $100 million in insurance claims. While this might seem like news in the property and casualty insurance world, you might already be familiar with the debit card process in health insurance. That industry has already been using similar cards to help their insureds pay for out-of-pocket expenses such as prescriptions and co-pays that might be covered by flexible spending accounts.

As you can see, the insurance industry is also making strides to improve their technology in a way that is responsive to their customers. The use of manual checks to settle claims or make advances on property damage is really an antiquated way of reimbursing policyholders. In the aftermath of a disaster, getting much-needed funds to affected homeowners should be a top priority. The use of debit cards is definitely a step in the right direction.


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