What are covered expenses?
Covered expenses refer to what an insurance provider includes as part of its coverage.
Every insurance provider outlines specific medical treatments, accidents or other occurrences it will pay for as part of your coverage. Health insurance, life insurance, dental insurance, auto insurance, and home insurance providers typically cover specific incidents.
If you have a deductible, these expenses might fall under the deductible. If you don’t or you’ve already met your deductible for that year, the insurer reimburses you for those costs.
You must pay out-of-pocket for anything not included in your insurance policy. For example, if you have vehicle liability insurance, your insurance policy covers damage to another person’s vehicle or injuries sustained by another person in an accident where you’re at fault.
It doesn’t cover damage to your vehicle or medical treatment for your injuries, and you can’t claim these as covered expenses. It may cover your legal fees if someone sues you because of an auto accident.
On the other hand, comprehensive insurance or collision insurance typically covers everything else that might affect your vehicle. For example, if your vehicle has a cracked windshield from hail damage, this might be an expense that the insurance provider covers.
Also called eligible expenses, covered expenses must meet specific criteria set forth by the insurance provider. For example, if you have a health insurance policy, covered expenses apply only to you and perhaps to your spouse and dependents.
However, you could not use your insurance for anyone else’s treatment. Also, the expenses must occur during your eligibility period. If this hasn’t started yet, or if your current year has ended and you haven’t paid for a new year, expenses that would otherwise be reimbursed won’t be considered covered expenses.
Covered expenses example
If you have dental insurance, your insurance provider might cover a certain number of fillings per year. If you need a filling and haven’t had one in that tooth for that benefit year, it would be a covered expense and your insurance provider would pay for it, assuming you’ve already met your deductible.
However, your insurer might cover only restorative work and not cosmetic; so, if you want veneers put on your teeth, you may have to pay for them yourself as they might not be a covered expense.
Covered expenses vary by health insurance plan. Learn how to evaluate plans and find the right one for you.