Claims Terminology

The definitions appearing in this Glossary are provided solely for general informational purposes. They are not intended to be complete descriptions of all terms, conditions and exclusions applicable to the products and services defined. Also, in the case of any inconsistency between the definitions in this Glossary and the definitions appearing in the actual insurance policy, the definitions contained in the actual policy shall govern.


Additional Insured An individual or organization covered by an insurance policy other than the named insured in the policy declarations. In an automobile policy, anyone who drives the car with the owner’s consent is an additional insured; although, in most cases, the additional insured must be named in the policy.

Aggregate Benefits  The maximum amount an insured is able to collect under a single policy regardless of the number of claims, injuries, accidents, or number of insureds.

Claimant One who presents a claim or one who has suffered a collectible loss.

Claims-Made Coverage A policy providing coverage only if a claim is made during the policy period. If the policy has a retroactive date a loss which occurred before that date, is not covered. (See Occurrence Coverage for comparison.)

Claims Reserve   An estimate of the amount an insurance company expects to pay for reported and estimated claims. This may include amounts for loss adjustment expenses.

Claims Adjustment  The process of handling and settling claims or the amount requested by a policyholder or claimant because of a loss or damages suffered.

Extended Reporting Period (ERP)  In “claims-made” liability policies, only those claims that occur after the retroactive date and are reported or filed against the insured during the policy period are covered by the policy. The ERP, or tail, is an endorsement available to extend the reporting period for the filing of a claim to give additional time in order to be considered covered.

Loss  Losses can be defined in three categories:

  1. Incurred Loss: This is the amount at which the insurance company has established a loss (or losses) on their books.
  2. Paid Loss: This is the amount that has actually been paid toward a specific claim or group of claims.
  3. Loss Reserve: This is the amount that has been established as a reserve for a specific claim or group of claims. This amount is equal to the incurred loss less the paid loss.

Occurrence Policy  The traditional occurrence liability insurance method provides coverage for losses from liability-imposing causes which occurred during the policy period, regardless of when the claim is asserted. Once the policy period is over in a claims-made form, the approximate extent of the underwriter’s liability is known. With the traditional occurrence liability coverage method, the underwriter may not discover the extent of liability for years to come from losses claimed to have occurred within the policy

Tail Coverage  For claims-made policies, tail coverage is purchased at the termination of the policy to protect against losses or claims which have not yet been discovered or reported. For occurrence policies, this is unnecessary as claims are handled according to when they happened instead of when they were reported or discovered