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Step 3: Negotiation and Settlement

After the valuation process is complete, the final part is to arrive at a claim amount which shall be mutually negotiated and settled between the parties to the insurance contract.

The two other factors that can affect insurer’s cost for property claims: -

· Subrogation

· Salvage rights

Subrogation is an insurer’s right to recover payment from a negligent third party. When insurer pays an insured for a loss, the insurer assumes the insured’s right to collect damages from a third party responsible for a loss.

Salvage Rights are the rights of the insurer to recover and sell or otherwise dispose of insured’s property on which the insurer has paid a total loss or a constructive total loss.

Constructive Total Loss exists when a vehicle (or other property) cannot be repaired for less than its actual cash value minus the anticipated salvage value.


CHAPTER: 6 CLAIMS

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