Interest on Insurance Claim: What You Need to Know

Receiving interest on your insurance claim can be a game-changer, especially if you've been waiting for a long time to get your money.

Insurance companies are required to pay interest on claims, but the amount and duration of the interest vary depending on the policy and jurisdiction. In some cases, interest can be paid from the date of the loss, while in others, it may start later.

The interest on an insurance claim can be a significant amount, and it's essential to understand how it's calculated. According to the law, insurance companies must pay interest on claims in a timely manner, usually within a few months of the claim being made.

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Interest on Insurance Claim is a charge that insurers or organizations must pay to health care providers for delayed payments.

If an insurer or organization fails to adhere to the standards, they will be obligated to pay the claim amount plus interest.

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Interest is calculated on the amount of the claim or health care payment, and it's computed from the date the payment was required to be made.

The interest rate is either the rate set by the commissioner of taxation and finance for corporate taxes or twelve percent per annum, whichever is greater.

If the amount of interest due is less than two dollars, the insurer or organization is not required to pay it.

To determine if you're entitled to claim interest on your insurance claim, you need to understand the process. Section 57 of the Insurance Contract Act 1984 (Cth) states that insurers are liable to pay interest on claims they've unreasonably withheld.

The period in which interest is incurred is crucial. According to s. 57(2), it starts on the day it's unreasonable for the insurer to have withheld payment and ends on the day the payment is made.

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To calculate the rate of interest, you'll need to refer to Reg. 32 of the Insurance Contracts Regulations 1985 (Cth). This regulation provides a formula that includes the 10-year treasury bond yield at the end of the half-financial year ending in the specified period.

The key issue to determine is what's considered a "reasonable period" for the insurer to pay the claim. Unfortunately, there's no clear definition in the Act or Regulation, so it will depend on the facts of each case and be decided by the courts.

To assess what's a reasonable period, it's essential to retain correspondence between you and the insurer, as well as your insurance policy documents and payment receipts. This will help you build a strong case.

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