What is a 'claim' in insurance terminology?

A claim in insurance terminology refers to a request for payment or compensation made by the insured to the insurance company based on the terms outlined in their policy. When an insured individual experiences a loss or damage that is covered by their policy, they file a claim to seek reimbursement or payment for the insured loss. The claim serves as a formal notification to the insurer that the insured is seeking a benefit under the terms agreed upon in the insurance contract.

This concept is central to the operation of insurance, as it is the mechanism through which policyholders can access the financial protection that they have paid for through premiums. It establishes the process by which the insurer evaluates and processes the request for compensation according to the agreed policy conditions.

Other options do not accurately capture the definition of a claim. An audit of insurance policies, for example, involves reviewing the terms and conditions of coverages to ensure compliance and proper coverage levels, rather than seeking benefits from the insurer. A denial of coverage pertains to situations where a claim does not meet the criteria for payment, while a review of risk management practices focuses on assessing and improving strategies to manage potential risks, not directly related to claims processing.