What is a claim in insurance terms?

In insurance terms, a claim refers to an official demand for payment or benefits under the terms of an insurance policy. This process occurs when an insured party notifies the insurer of a loss, damage, or another event that triggers coverage specified in the policy. By submitting a claim, the policyholder is essentially asking the insurance company to fulfill its contractual obligation to pay for covered losses, thereby initiating the claims process.

This definition aligns with the purpose of insurance—as a mechanism for risk management where the insured can seek financial compensation for covered events. The claims process typically involves an investigation by the insurer to validate the claim and determine the appropriate amount of compensation based on the terms of the policy.

In contrast, the other options refer to different aspects of insurance. Potential future loss describes a risk rather than an actual event that has occurred. The policy renewal process is about extending coverage for another period and does not pertain to claims. Lastly, a denied request for coverage indicates that a claim was not accepted, which is the opposite of what happens when a claim is successfully processed.