In claims adjudication, which step involves calculating the indemnity amount payable?

In claims adjudication, which step involves calculating the indemnity amount payable?

• A. Notification
• B. Verification
• C. Indemnity calculation
• D. Payment

Answer: (C)

Calculating the indemnity amount payable is the stage where the insurer converts the verified loss into the actual amount it will pay under the policy. After the claim is reported and the facts and coverage are verified, this step applies the policy terms—deductibles, limits, coinsurance, and any exclusions or adjustments—to determine what the insured is entitled to receive. Only after this calculation is complete does the payment step release funds. Notification is simply reporting the claim, verification checks that the claim details and coverage are correct, and payment is the act of disbursing the calculated amount.

Calculating the indemnity amount payable is the stage where the insurer converts the verified loss into the actual amount it will pay under the policy. After the claim is reported and the facts and coverage are verified, this step applies the policy terms—deductibles, limits, coinsurance, and any exclusions or adjustments—to determine what the insured is entitled to receive. Only after this calculation is complete does the payment step release funds. Notification is simply reporting the claim, verification checks that the claim details and coverage are correct, and payment is the act of disbursing the calculated amount.