Claims Handling and Settlement
Claims process
Claims handling moves through notification, registration, investigation/assessment, coverage verification, settlement, and recovery (subrogation/salvage). The handler must confirm the policy was in force, the peril is covered, exclusions do not apply, and the duty of fair presentation was met. Loss adjusters assess large or complex losses. Salvage reduces the claim; subrogation recovers from third parties.
Settlement
Indemnity claims settle at repair/replacement or indemnity value less any excess, capped at the sum insured, adjusted for average. Benefit claims pay the agreed sum on proof of the event. Prompt, fair settlement and clear communication are conduct requirements; unjustified delay or low offers breach fair treatment rules. Fraud must be investigated but not assumed.
Traps
Paying before verifying cover; ignoring exclusions or conditions precedent; confusing salvage with subrogation; miscalculating average; and failing to document decisions. Also watch for the difference between a repudiation (valid denial) and a reduction (partial).
Worked example
Property sum insured 80,000; value at risk 100,000; loss 20,000; excess 500. Average applies: 20,000 × (80,000/100,000) = 16,000; less excess = 15,500 payable.