What Are Insurance Claims and Disputed Liability

What is Insurance?

Insurance is a settlement between two parties; the insurer and the policy holder, –that in the condition of loss the insurer is liable to pay a pre-determined amount to the policyholder. Any legal entity may buy an insurance policy, if it may be exposed to some risk of loss. Insurance basically is a means of risk management, to minimize a significant amount of loss which may occur due to some uncertain conditions or situations. The “insurer” is the party selling the insurance; whereas the “insured” or “policy holder” is the party that buys the insurance coverage. The amount that is paid for a certain insurance coverage is known as a premium.



Insurance revolves around the recurring (monthly or annually) payment made by the insured, to the insurer in return for the insurer’s agreement to financially fulfill or compensate any loss that occurs to the insured property. The insurance holder gets a contract detailing the circumstances and conditions under which the insurer is liable to fully compensate the loss of the insurance. Insurance is considered an integral part of any legal entity nowadays. Many insurance providers offer different types of policies according to the requirements of various different types of insurance holders.

An insurance policy acts as a backup, in case of any uncertainty which may occur. In most cases like; natural disasters, theft, robbery, and fire, some of the insurers are liable to compensate the insurance policy holder. While the case may be different for some other insurance providers, they might provide compensation for only some uncertainties, which are detailed in their provided contract.

Types of insurance

While there are only two different types of insurance companies, non-life insurance and life insurance. There are many types of insurance. The coverage of each insurance type differs from one provider to another. Generally, insurance can be divided into 3 main types (including many sub-types), which are given below:

Personal Insurance
As the name suggests, these insurances basically provide coverage to the insured’s own self. The main purpose of these insurances is to provide safety from some risks, by giving benefits in the shape of salary compensation, pensions, and family allowances. These insurances also cover the events of sickness and/or accidents. Personal insurance policies include; military insurance, health insurance, accidental insurance, unemployment insurance, and occupational pension plans.

Property Insurance
Property insurance policies basically provide coverage for certain situations such as; destruction, damage, loss of property by fire or water, glass breakage, and thievery (either burglary or robbery). Many insurance providers provide policies which are specially designed to suit the needs of different sorts of legal entities. These policies generally include coverage for: Buildings in case of fire; which doesn’t cover the furnishing and goods situated inside the building –but the structure itself, Property insurance: This policy essentially covers all the things located inside a property be it the goods, the furnishing or the building, Technical insurance: this provides coverage for all the IT related equipment or installations, the policy aids the replacement and/or repairmen charges.

Asset Insurance
These insurance policies provide cover for resources of a business or legal entity. This policy includes coverage for damage done by an insured motor vehicle (bike, car, etc.) which is meant to be used on public roads, to any third party vehicle. Professional liability; provides cover for any harm caused (intentionally or unintentionally) to a third party, by the action of a professional. This policy helps protect working professionals from any loss which occurs due to their activity.

What is an insurance claim?

An insurance claim is an application given to the insurer by a policy holder, to fulfill a loss which occurs, and falls under the terms and conditions of a chosen insurance policy. After a claim is filed to an insurance company, a committee decides if the claim made is valid and falls under the coverage of the determined insurance policy. Insurance claims can be filed either directly or through an agent who deals with insurance claims or a broker.

Insurance claims are classified according to their level of seriousness and are assigned to the suitable authority to be dealt with by the insurance company. If the committee decides, the application or claim filed is reasonable, and comes under the terms and conditions of the insurance contract given to the policy holder. The insurance company then authorizes payment to the insured and pays a valid sum of money –which may be predetermined or determined after the claim is approved. The insurance holder also has the option available, to hire a public adjuster on their behalf, to aid or help negotiate the amount of money payable with the insurance company. In the case of claims being rather complex or complicated; involving a third party (who isn’t obligated to cooperate with the insurance company or holder, via a contract –but only at will).

The insured can opt for an add-on to his insurance policy known as “loss recovery insurance”. This add-on helps cover the charges of a public adjuster dealing with the claim. Insurance companies generally tend to maintain a balance when dealing with insurance claims, the company representatives try to satisfy their customers along with minimizing the handling expenses for their insurance company. The disputes that occur between the insurance companies and policy holders due to the legality of the made claims, may sometimes assume the shape of a legal action or litigation, against both the respective parties.

What is a liability?

A liability in general may refer to different things such as; liability as in a person is regarded to be legally responsible for an action, Liability is also a person or party, which may hinder or disadvantage another party due to their presence. Liability may also refer to a debt which a person is responsible for and is liable to pay. But in terms of insurance, liability assumes a different purpose. Keeping the insurance frame of reference in mind a liability is something that a person or a certain party is legally and/or financially held responsible for.

Liabilities can be sued for by the person who suffers some disadvantage due to it. The victim is liable to sue the person responsible for the action which caused the loss, hindrance, or disadvantage. For example: if two parties are involved in a car accident, and due to the negligence or carelessness of one party the other party suffers some amount of loss –given that the effected party is insured, The party who plays the victim in this scenario is liable to legally sue the other party involved for the damages and compensation for any injuries and other damages that may have occurred due to the accident. If both the parties are insured –then the claim and payment process is routinely dealt by the respective insurance companies of each party. Insurance companies may legally hire lawyers or professionals on their behalf to settle the dispute.

Generally, most insurance companies provide coverage for these types of liabilities in their policies. In these cases both the insurance companies cooperate with each other to come to a mutual decision. All the insured are required to do is file a claim for coverage and hand over all the legal responsibilities from their behalf to their insurance provider. Liabilities usually revolve around the fault of one of the two parties involved. The party which is proven guilty by a committee or a court is then liable to pay off the loss and further expenses. Insured parties usually have these types of liabilities covered in their chosen insurance policies.

Disputed liabilities

Disputed liabilities occur when there’s a dispute between two parties over whose fault it was, –that led to a certain loss or damage. Generally the party that is found to be at fault is liable to pay for the loss and other expenses occurred to the other party. For example: A car accident occurs between two parties, both the parties suffer from some damages and injuries. Now from each party’s perspective the other party is at fault, and who really is at fault is not known.



Now in order to determine which party is really at fault and is liable to fulfill the consequences, a committee is shaped by the insurance companies of both the parties involved. The committee completes a detailed investigation and takes account of what happened with the help of experts. Witnesses’ accounts are reviewed and any other parties involved are interviewed, photographic evidence of damages is looked upon. Then both the insurance parties settle out the dispute with each other, coming to a decision of which party is the offending party and is at fault.

The insurance company of the offending party is then liable to pay for all the damages and injuries, sometimes the companies are also liable to pay for the legal fees for the other party, depending on the policy. –Now in this situation an insured party may dispute the liability, if there’s a conflict as to which party is at fault. Then the insurance companies of the involved parties are required to come up with a decision, after a thorough follow-up investigation.

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