A liability insurance policy that is triggered at the time a claim is paid, rather than at the time a claim is first reported (claims-made policy) or at the time the injury or damage occurs (occurrence policy). This approach can offer significant benefits in terms of pricing accuracy. However, since claims will be paid only while the policy remains active, the insured facing a claim cannot cancel the policy while the claim is pending, often for years, unless he or she is willing to pay the claim out of personal assets.

In all correspondence with the insured relating to a claim, the Insurers incorporate the words” Without Prejudice” on the top. The effect of these words is that whatever action the insures may take in the processing of the claim, they reserve their right to deny liability ultimately if they are legally entitled to do so.

Major repairs to a goods vehicle, for example involves a large outlay and the insured may not be able to spend such large amounts initially and then claim reimbursement from the Insurers after the repairs are carried out. In such cases Insurers offer to pay a sum which is lower than the amount of repairs recommended by the surveyors, say, by 25% to 30% without insisting on repairs being carried out. These settlements are also effected when, in the case of a total loss, the salvage is not easily disposable or the salvage value realizable is not reasonable. A mutually agreed salvage value is deducted from the total loss amount recommended by the Surveyor and the net amounts paid, the insured being allowed to retain the salvage.Claims, Cash Payment : When the Insurers are satisfied in regard to the cause and extent of loss, as ascertained from the claim form and other inquiries and also, in large losses, report from independent surveyors, the loss is settled by cash payment. This is the most common method of claims settlement.Claims, Reinstatement : This method would apply in respect of buildings or other property destroyed or damaged by Fire. This method is rarely used by the Insurers, because once this method is chosen by Insurers, they cannot subsequently withdraw and offer cash settlement. Under this method, the responsibility for the way in which reinstatement is carried out will be of the Insurers. Generally, Insurers would resort to this method only when the insured claims an amount far in excess of the cost of reinstatement.Claims, Repair : Instead of making a cash payment, the settlements of claims may be effected by repair. This is the practice followed for motor damage claims. The procedure is for the insured to submit a detailed estimate of the cost of repairs to the Insurers who will arrange an inspection of the damaged vehicle to see that the repairs are necessary and the cost reasonable. Thereafter, the Insurers will authorize the repair of the vehicle. On receipt of the final bill of repairs and a satisfaction note from the insured, the repairer is paid.Claims, Replacement : he Insurers may Directly arrange with a dealer to replace the property (e.g., jewellery) lost or damaged. This method is commonly employed under plate glass Insurance.Claims, Theft Claims, Vehicles : If the vehicle is stolen and not traced by the police, say, even after 4 to 5 months, the loss is considered on a total loss basis.Claims, Total Loss, Accidental Damage, Motor : If, in the opinion of the Surveyor, a vehicle is not repairable or the repairs are not economical, the loss is settled on a total loss basis. The amount payable is the actual market value of the vehicle immediately prior to the loss or the insured value of the vehicle, whichever is the less. The salvage that is, whatever remains of the damaged vehicle, is taken over by the Insurers and disposed of for their own benefit.Claims Notified/Reported : Claims that have been incurred and which have been notified or reported to the insurer. It is often used in relation to those claims reported during the accounting period.

There are several methods of providing indemnity to the insured. These are: