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Accounting treatment of insurance claim.

Pankaj Arora (Job) (150 Points)

04 August 2011

I have recd. an insurance claim for a car. What entry should I pass when it has been paid directly to service center and under what head shall I book insurance claim.

Waiting for rply.

Thanks

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12 Replies

devang (CA FINAL article ) (181 Points)
Replied 04 August 2011

are u create an insurance account of ur car?

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Pankaj Arora (Job) (150 Points)
Replied 05 August 2011

I m paying insurance premium of Rs. 10000/- p.a plus service tax. So what entry should be paid at the time of receiving insurance claim.

CA.B.Sivakumar (-) (162 Points)
Replied 18 August 2011

	PARTICULARS	DEBIT	CREDIT
	AT THE TIME OF PAYING PREMIUM
DR	INSURANCE-VEHICLE	10000
DR	SERVICE TAX @ 10.30%	1030
CR	NEW INDIA ASSURANCE(ASSUMPTIONS)		11030

DR	NEW INDIA ASSURANCE(ASSUMPTIONS)	11030
CR	BANK		11030

	DURING CLAIM

DR	INSURANCE CLAIM RECEIVALE	50000
CR	"Y" SERVICE STATION		50000

DR	"Y" SERVICE STATION	50000
CR	BANK		50000
	(company paying the bill to service station)

DR	BANK	50000
CR	INSURANCE CLAIM RECEIVALE		50000
	(receiving claim cheque from insurance company

NOTE(assumption)
The vehicle got repaired in "Y" service station and payment made by company
The company applied for insurance claim with insurance company

hope this will clarify your doubt

1 Like

Rajesh (Service ) (7576 Points)
Replied 19 August 2011

If the claim has been paid by Insurance Co directly to the Service Centre then no need to account for the claim. Accounted only the extra amount you have paid in Repair & Maintenance account.

Pankaj Arora (Job) (150 Points)
Replied 19 August 2011

Dear Sivakumar

Under what group should I open the a/c insurance claim receivable. Is it a revenue a/c or a capital a/c also if the amount paid to service station is 25000/- by the company and 25000/- by the insurance company directly then what entry should I pass.

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CA.B.Sivakumar (-) (162 Points)
Replied 19 August 2011

Dear Mr.Pankaj Arora,

Its an balance sheet item (asset).

Regarding the accountng entry, just you think and post your accounting entry even if it is wrong. Mr.Rajesh has given you an hint.

Even if it is wrong you post your reply. I'll correct it.

pradnya (Article) (188 Points)
Replied 03 December 2012

if in banks saving account has balance of 32 lacs . which is to be transfer to members fund .

saving a/c dr.

to fixed deposits

fixed deposits matured

to members fund .

are the entries are right

bikash agarwal (B.Com) (24 Points)
Replied 05 April 2014

how can we treat the insurance premimum paid for the plant the are either shut down or closed or break down during the year?

pavin varghese (articled assistant) (24 Points)
Replied 27 April 2014

How to account an lnsurance received against a loss?

pavin varghese (articled assistant) (24 Points)
Replied 27 April 2014

Plz tell the treatment of insurance claim received against a loss?entry

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B.S.Omkareshwar (CA-Final Student) (217 Points)
Replied 29 August 2014

hey pavin varghese, JE for Insurance claims ::::: 1. for insurance payment Prepaid insurance a/c Dr To Cash/bank a/c Insurance expense a/c Dr To Prepaid Insurance a/c 2.For Claim Related Step 1. Insurance Receivable a/c Dr To Concerned asset/stock a/c step 2. Cash/Bank a/c Dr To Insurance receivable a/c first of all insurance payment is made prior to the period covered for. so 2 JE are made for payment related as mentioned above. For claim related,first insurance claim receivable is recorded on accrual basis. i.e. Debit insurance receivable a/c and credit concerned asset/stock destroyed. later when actual claim is received,debit Cash/bank a/c and credit insurance receivable a/c which was earlier debited hope it helps

1 Like

AverageJoe (Student ) (44 Points)
Replied 29 July 2017

Originally posted by : Rajesh
	If the claim has been paid by Insurance Co directly to the Service Centre then no need to account for the claim. Accounted only the extra amount you have paid in Repair & Maintenance account.