Claims Handling and Settlement
Claims Handling and Settlement tests the process from notification to payment, the evidence required, and the coverage decisions that justify payment, partial payment or repudiation.
Process
- Notification: check timeliness against the notice condition, confirm the policy was in force and premiums paid, and register the claim.
- Documentation: claim form, proof of loss, invoices, medical or police reports, evidence of ownership.
- Coverage assessment: identify the peril, apply proximate cause, check exclusions, warranties and conditions, and confirm the interest insured.
- Investigation: surveyors, loss adjusters, medical examiners and forensic review, proportionate to the amount and to fraud indicators.
- Quantum: indemnity value, repair or replacement cost, depreciation, salvage, excess and any average clause.
- Settlement and recovery: cash, repair, replacement or reinstatement; then subrogation against third parties and salvage disposal.
- If declining, give written reasons and the complaint or dispute route; consider ex gratia payment only with documented authority.
Worked example
A car is a total loss. Market value is 12,000; the wreck fetches 1,500 as salvage; the policy excess is 300. The insurer pays 12,000 - 1,500 - 300 = 10,200 and takes the salvage. If the policy were on an agreed-value basis, the agreed figure would replace market value, but the excess and salvage treatment still follow the wording.
Traps
Adjusting quantum before confirming cover. Missing a warranty breach or an exclusion that applies to the cause of loss. Forgetting that salvage value reduces the payment. Treating late notification as automatically fatal when the insurer suffered no prejudice. Failing to reserve for outstanding claims.