What does "claims settlement" refer to in insurance?

Claims settlement refers to the final resolution of a claim, which involves the process of an insurance company reviewing, assessing, and ultimately determining the validity of a claim filed by an insured party. Once a claim is deemed valid, the insurer processes and pays out the agreed-upon compensation to cover the financial loss or damage incurred by the policyholder. This step is crucial as it signifies the conclusion of the claims process, allowing both the insurer and the insured to finalize their responsibilities and obligations regarding that particular claim.

In contrast, the initial filing of a claim involves the policyholder submitting their request for compensation, the denial of a claim pertains to situations where the insurer does not agree to pay out based on the terms of the policy, and the negotiation process, when applicable, is about discussions between the insurer and the insured regarding the terms and amount of the settlement before arriving at a final resolution. Thus, claims settlement being defined as the final resolution encompasses the entire process leading up to the payout, marking the end of that claim's journey.