Category: Claims fundamentals · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-11
An insurance claim is a formal demand made by a policyholder (or by a third party where the policy permits) requesting the insurer to provide the indemnity, payment or service promised under the policy following an event covered by the policy wording.
Category: Claims fundamentals Also known as: Claim, policy claim, indemnity claim Related concepts: Claim notification, First notification of loss, Claims handling, Loss event
An insurance claim is the mechanism by which the contractual promise contained in an insurance policy is triggered. Insurance is, in essence, a conditional contract: in exchange for the premium, the insurer agrees to indemnify the insured (or to pay a defined sum) on the occurrence of a defined event. The claim is the formal request that converts this contingent promise into a present obligation.
In English law, an insurance claim is best understood as the assertion by the insured of a right to performance under the contract of insurance. It is not, in itself, a cause of action — the cause of action arises if and when the insurer wrongfully refuses to pay or delays payment. The claim is the factual and procedural step that brings the dispute into being.
A valid claim ordinarily requires four elements: (i) the existence of a policy in force at the relevant time; (ii) an event or loss that falls within the scope of cover; (iii) compliance by the insured with any conditions precedent to liability (such as notification within a stipulated period); and (iv) quantification of the loss in accordance with the indemnity basis specified in the policy.
The breadth of the term covers a wide spectrum: from a motorist reporting a windscreen chip on a comprehensive motor policy, to a multinational corporation notifying a complex product-recall loss running into hundreds of millions of pounds. The fundamental legal architecture is the same; what differs is the procedural overlay, the evidentiary burden, and the commercial sophistication of the parties.
In the United Kingdom, claims under consumer and small commercial policies are subject to the Financial Conduct Authority’s conduct rules, particularly the Insurance Conduct of Business Sourcebook (ICOBS), which imposes obligations on insurers to handle claims promptly and fairly. Larger commercial claims operate principally under contractual and common-law principles, supplemented by statute.
The principal statutory framework governing insurance claims in the United Kingdom is the Insurance Act 2015, which reformed the law of disclosure, warranties and remedies. Section 13A of the Insurance Act 2015 (inserted by the Enterprise Act 2016) introduced an implied term that the insurer must pay any sums due in respect of a claim within a reasonable time, with damages available for breach. This was a landmark change: prior to the Enterprise Act 2016, English law did not recognise damages for late payment of an insurance claim, a position confirmed in Sprung v Royal Insurance (UK) Ltd [1999] Lloyd’s Rep IR 111.
Section 14 of the Insurance Act 2015 abolished the rule in Britton v Royal Insurance Co (1866) by which any fraudulent element vitiated the whole claim and replaced it with a statutory framework: the insurer may refuse the fraudulent claim, recover sums already paid, and treat the contract as terminated from the time of the fraudulent act.
For marine insurance, the Marine Insurance Act 1906 remains the foundational code, with sections 55–63 governing the measure of indemnity and sections 57–62 dealing with total loss, partial loss and abandonment.
For consumer insurance, the Consumer Insurance (Disclosure and Representations) Act 2012 governs pre-contract disclosure but the claims process itself is regulated by ICOBS 8 of the FCA Handbook. ICOBS 8.1 imposes obligations on insurers to handle claims promptly and fairly, to provide reasonable guidance on how to make a claim, to settle claims promptly once settlement terms are agreed, and not to refuse a claim unreasonably.
The Financial Ombudsman Service has jurisdiction over consumer and micro-enterprise claim disputes up to the statutory limit (currently £430,000 for complaints referred after 1 April 2024 about acts or omissions on or after 1 April 2019).
The lifecycle of an insurance claim typically begins with a loss event — the physical, financial or legal occurrence that the policy was purchased to address. The policyholder, or in some cases a broker or third party, notifies the insurer of the loss. Notification is itself a critical step: many policies, particularly in professional indemnity, directors’ and officers’ and other claims-made classes, contain conditions precedent requiring notification within a specified time. Failure to comply with a condition precedent can defeat the claim entirely.
Once notified, the insurer opens a claim file and assigns a handler. The handler’s first task is coverage analysis: does the loss, as described, fall within the insuring clause, and are there any applicable exclusions or conditions? At the same time, the insurer establishes a loss reserve — an internal estimate of the likely ultimate cost of the claim — for accounting and regulatory purposes.
Where the loss is straightforward (a stolen mobile phone, a minor vehicle prang), settlement may follow rapidly on production of evidence such as a crime reference number, a repair estimate, or photographs. For larger or more complex losses, the insurer will typically appoint a loss adjuster, who acts independently to investigate the cause and extent of loss, verify quantum, and report to the insurer. The policyholder may in turn appoint a loss assessor (or instruct their broker) to advance their interests.
Quantification follows the indemnity basis specified in the policy — reinstatement value, market value, indemnity value, agreed value, or other measure. Disputes commonly arise over scope of cover, application of exclusions, quantum, and the application of average where the sum insured is inadequate.
Settlement may be by cash payment, by reinstatement (insurer rebuilds or repairs), by replacement, or, in liability classes, by the insurer taking over defence and paying any damages and costs award. Throughout, the insurer is bound by ICOBS to handle the claim fairly and to communicate clearly with the policyholder.
Claims fall into several broad categories that govern procedure. First-party claims are those in which the insured claims for their own loss, as in property damage or business interruption. Third-party claims are those in which the insured’s liability to another party triggers the policy, as in employers’ liability, public liability and motor third-party. Claims-made claims are those notified during the period of insurance under a claims-made policy, typically professional indemnity or directors’ and officers’ cover. Losses-occurring claims depend on the date of loss falling within the policy period, regardless of when notified.
A further subdivision is between contested and uncontested claims. Where coverage and quantum are agreed, the claim proceeds straightforwardly to settlement. Where there is a coverage dispute, the parties may negotiate, mediate, litigate, or arbitrate. Many commercial policies contain arbitration clauses.
In marine insurance, claims may be for total loss (actual or constructive), partial loss, general average, or salvage. Each carries its own procedural and evidentiary architecture under the Marine Insurance Act 1906.
There are also subrogated claims, in which the insurer, having indemnified the insured, steps into the insured’s shoes to pursue a third party responsible for the loss, and co-insurance or contribution claims between insurers where multiple policies respond to the same loss.
A small Surrey-based design consultancy, ApexDesign Ltd, suffers a fire at its offices on 12 March 2026. The fire damages computer equipment, prototype models and the leasehold premises. The firm holds a commercial combined policy through its broker, with property damage, business interruption and public liability sections, renewed on 1 January 2026.
On 13 March 2026 the firm’s office manager telephones the broker. The broker submits a first notification of loss to the insurer the same day, providing a brief description of the incident, the date of loss, an initial estimate of damage at £180,000, and the policy reference. The insurer opens a claim file, assigns a handler and instructs a loss adjuster to attend on site within 48 hours.
The loss adjuster inspects the premises on 15 March, agrees the cause as accidental fire (within cover), and identifies that the damaged stock of prototype models was held at a temporary studio not declared at inception. After investigation, the insurer accepts the property damage claim in full at £142,000 (following adjustment) and the business interruption claim at £56,000 for 11 weeks of reduced trading. The prototype models held at the temporary studio are excluded because the location was not specified. Settlement of the property damage element is paid on 28 May 2026; the business interruption element is paid in two instalments as the indemnity period progresses.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Next review: 2026-12-11.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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