Which term refers to the legal process of settling a claim based on the terms of an insurance policy?

The term that refers to the legal process of settling a claim based on the terms of an insurance policy is known as claims adjustment. This process involves evaluating the insurance claim, determining the coverage, and resolving any disputes regarding the claim amount. It is an essential function of insurance companies to ensure that claims are handled according to the policy's conditions and the arising circumstances.

Claims adjustment typically entails thorough investigation, assessment of damages, and negotiation with the claimant or their representatives. The objective is to settle the claim fairly and in accordance with the insurance contract. This process also encompasses gathering relevant documentation, possibly involving interviews and on-site evaluations.

While subrogation refers to the insurer’s right to pursue a third party that caused the loss to recover the payout from the insured, litigation usually involves taking disputes to court, and arbitration is a method of resolving disputes outside of courts. Claims adjustment, however, specifically deals with the resolution of claims based on existing policies and is the most direct answer in the context of settling insurance claims.