In insurance, what is the term for the amount of money paid by the insurer upon a valid claim?

In insurance, what is the term for the amount of money paid by the insurer upon a valid claim?

• A. Deductible
• B. Payout
• C. Premium
• D. Liability

Answer: (B)

The term for the amount of money paid by the insurer upon a valid claim is known as a payout. This is the sum that the insurance company disburses to the policyholder, or a third party, as financial compensation for a covered loss. It is essentially the funds made available to fulfill the obligations outlined in the insurance policy when a covered event occurs, such as damage to property, accident claims, or other losses. In contrast, a deductible refers to the amount the policyholder must pay out-of-pocket before the insurer contributes to the claim. The premium is the regular payment made to maintain the insurance coverage, and liability pertains to the responsibility for damage or injury to others, which may often be covered under certain policies but is not directly related to claim payouts. Understanding these distinctions helps clarify the insurance process and the financial responsibilities involved.

The term for the amount of money paid by the insurer upon a valid claim is known as a payout. This is the sum that the insurance company disburses to the policyholder, or a third party, as financial compensation for a covered loss. It is essentially the funds made available to fulfill the obligations outlined in the insurance policy when a covered event occurs, such as damage to property, accident claims, or other losses.

In contrast, a deductible refers to the amount the policyholder must pay out-of-pocket before the insurer contributes to the claim. The premium is the regular payment made to maintain the insurance coverage, and liability pertains to the responsibility for damage or injury to others, which may often be covered under certain policies but is not directly related to claim payouts. Understanding these distinctions helps clarify the insurance process and the financial responsibilities involved.