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+1-802-778-9005Recording an insurance claim payment in QuickBooks—whether using the Desktop or Online version—ensures that your financial records accurately reflect both the income from the claim and any associated expenses. The process generally involves recording the payment as income or an “Other Income” type and properly categorizing the insurance-related expenses that the claim reimburses. By doing this, you’ll maintain clean records for both tax and bookkeeping purposes.
An insurance claim payment refers to the compensation provided to a policyholder by the insurance company or adjuster as a result of a covered claim, typically involving reimbursement for damages, settlements, or policy benefits.
These payments can encompass different types of claims, including property insurance, bodily injury, damaged goods, or liability claims. The process of receiving an insurance claim payment involves the policyholder submitting a claim, which is then reviewed by the insurance adjuster to determine the coverage and extent of compensation. Adjusters play a crucial role in assessing the validity of the claim and negotiating the payment amount.
The insurance company validates the claim (or denies the claim). If it is approved, the insurance company will issue payment to the insured or an approved interested party on behalf of the insured. Insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams. In some rare cases, a third party is able to file claims on behalf of the insured person, but generally, only the person listed on the policy is entitled to claim payments.
A paid insurance claim serves to compensate a policyholder against financial loss. An individual or group pays premiums as consideration for the completion of an insurance contract between the insured party and an insurance carrier. The most common insurance claims involve costs for medical goods and services, physical damage, loss of life, liability for the ownership of dwellings (homeowners, landlords, and renters), and liability resulting from the operation of automobiles.
Recording insurance claim payments in QuickBooks is crucial for accurate transaction tracking and financial management. This process allows you to maintain a clear record of incoming payments from insurance companies and outgoing payments to suppliers or service providers.
With the help of this, companies can streamline their accounts receivable and accounts payable management and improve efficiency in tracking outstanding balances. It not only enhances financial transparency but also enables businesses to make informed decisions based on up-to-date financial data.
To record the Insurance Claim payment in QuickBooks Online, You need to create an account to track the entry and then make a deposit. Adhere to the steps listed below.
Click the Accounting menu on the left panel and then choose a Chart of Accounts to open the All Lists page.
Select the New menu in the upper right corner of your screen to access the Account window.
Herein, hit the Account Type drop-down menu to choose the account you want to use.
Opt for the correct Category under the Detail Type drop-down menu.
Enter a Term that will identify the account in the Name field.
Fill out the remaining fields and then press the Save and Close tabs.
Hit the New menu in the upper left corner and then select Bank Deposit under the Other section.
Navigate to the Add funds to this deposit section to input the entry on the Bank Deposit page.
Choose the appropriate recipient from the Received from column and then enter the account previously created in the Account field.
Type the Amount and then fill out the remaining field boxes.
Click the Save and Close tabs.
Head to the +New icon and then select Bank Deposit.
Opt for the Add funds to this deposit section to input the entry on the Bank Deposit page.
From the Account column, select the Other Income account.
Choose the class the insurance claim will be linked to under the Class section.
Enter all other necessary details, then press Save and Close.
You are recommended to create a new account to categorize and track the insurance claim in QuickBooks Online.
Below are the steps for the same:
Navigate to the Gear icon at the top right corner of your screen and then choose a Chart of Accounts under Your Company.
Press New and select an Account and Detail Type.
Enter the name of the account in the Name field.
Add a Description if required. Then, Press the Save and Close buttons.
Once done, make a bank deposit and categorize it under the account created above.
Let’s see how:
Click the + New button at the left navigation bar. Then, select Bank Deposit under Other.
Choose the account you want to deposit the money into from the Account drop-down menu.
Enter the name of the Payee under the Received from field.
Select the insurance account created before in the Account field.
Write down the Amount, then hit Save and Close icons.
Below we’ve listed how to enter a manual transaction for the insurance claim you wanted to record. It can be easily implemented in QuickBooks Desktop.
Navigate to Transactions and then choose Add Transaction.
Enter the date, description, and Amount of the insurance claim.
Choose Select a category from CATEGORY AND TAGS.
Select Business Insurance.
Press the Save button.
The payment is not an income. You have to enter it as a deposit instead. Before moving ahead, create an account to track the entry.
Here are the steps to be followed:
Navigate to the Lists menu and select a Chart of Accounts. Then, press New from the Account drop-down menu.
Choose an account type, then click Continue.
Fill out the account details and then hit the Save & Close buttons.
Let’s see how:
Select Make Deposits from the Banking menu. Then, close (X) the Payments to Deposit window.
Under the Make Deposits window, choose the correct accounts.
Add the payment to the Amount field.
Enter other necessary details and then press Save & Close.
Insurance claim payments are paid out once a claim has been verified, and they financially indemnify the insured for a loss that is covered under the policy. This payment is sometimes paid directly to a care provider (as with health insurance), but usually, it is sent to the insured in the form of a check.
When you record insurance claim payments in QuickBooks, it removes old assets from your books, determines the profit or loss received from the insurance company, and perfectly holds any additional funds related to asset disposal.
To record a property insurance claim in QuickBooks, follow these steps:
Policy payout limits refer to the maximum amount an insurance provider will reimburse in the event of a covered loss. This amount is typically based on the property’s fair market value at the time the damage occurred. Additionally, payout amounts can be influenced by whether the policy includes a coinsurance clause. A coinsurance clause requires the policyholder to insure a minimum percentage of the asset’s value, meaning if coverage falls below this specified percentage, the insurance payout may be proportionally reduced.
If a loss is not covered by an insurance policy, the expense must be accounted for without any reimbursement from the insurer. In such cases, the business or individual will record the value of the damaged asset as a loss and write off the asset from their accounts. This entry represents the full impact of the loss, as there is no compensation to offset the expense.
If the claim payment partially reimburses your expenses, you can record the insurance payment as partial income. Enter the full amount of the claim payment into the “Other Income” account as you would for any insurance claim. Then, record the remaining expenses that weren’t covered separately, so that only the reimbursed portion reflects as income. This allows you to account for out-of-pocket costs without over-reporting your income.
Yes, it’s recommended to use an “Other Income” account for insurance claim payments. This separates these funds from your normal operating income, keeping your financial reports more accurate. To create this account, go to your Chart of Accounts, select “New,” and then choose “Other Income” as the account type. Label it something like “Insurance Claim Income” for easy identification.
Disclaimer: The information outlined above for “How to Record Insurance Claim Payment in QuickBooks Desktop or Online?” is applicable to all supported versions, including QuickBooks Desktop Pro, Premier, Accountant, and Enterprise. It is designed to work with operating systems such as Windows 7, 10, and 11, as well as macOS.
