Insurance Claims Settlement

Insurance claims settlement refers to the legal and technical process wherein, during the tenure of a motor vehicle insurance policy, following a road traffic accident or unforeseen incident covered under the policy that results in vehicle damage or third-party bodily injury, death, or property damage, the policyholder files a claim with the insurer, and the insurer investigates, assesses, calculates, and pays out compensation according to the policy terms. It serves as the core mechanism for delivering the economic compensation function of motor insurance.

Core Process of Motor Insurance Claims

The motor vehicle insurance claims workflow adheres to strict, standardised statutory procedures, generally comprising the following five key stages: 

Accident Reporting and On-Site Inspection:

Following an insured accident, the policyholder or driver must lodge a report with the traffic police and notify the insurer within the stipulated legal or contractual timeframe (typically within 48 hours). The insurance company will then dispatch an authorised surveyor or adjuster to the accident scene, or conduct online video surveys to gather evidence, verify the nature of the incident, establish liability, and assess the extent of damage. 

Loss Assessment and Adjustment: 

Once liability is confirmed following the survey, the insurer professionally assesses and itemises the costs of damaged vehicle parts, towing and recovery services, as well as third-party property damage or bodily injuries/fatalities. The assessment results must be agreed upon with the policyholder or the repair workshop before a formal loss adjustment report is issued. 

Submission and Verification of Claim Documents: 

The policyholder must compile and submit all required claim documentation as stipulated in the policy, primarily including the insurance policy/certificate, driving licence, vehicle registration certificate (VOC), traffic police report/investigation findings, repair invoices, medical reports, and medical bills. The insurer then conducts legal and financial audits to verify the authenticity, completeness, and compliance of the submitted documents. 

Claims Assessment, Verification, and Amount Calculation: 

Claims adjusters determine the final payout amount based on policy terms, exclusion clauses, applicable excess, liability proportions, and the No Claim Discount (NCD). 

Claim Settlement and Payout Disbursement:

Upon internal approval, the insurer issues a settlement notice to the policyholder or designated third-party claimant, disburses the payout directly into the designated bank account, and officially closes and archives the case.

Liability Apportionment and Loss Allocation Principles

When processing motor vehicle insurance claims, insurers must strictly comply with several statutory and contractual principles:

Liability Proportions and Fault-Based Compensation:

Compensation payouts under commercial third-party liability coverage and related endorsements are calculated or proportionally deducted strictly based on the accident liability proportions (such as full liability, primary liability, equal liability, or contributory/secondary liability) determined in the official traffic accident investigation report issued by the traffic authorities. 

Strict Adherence to the Principle of Indemnity: 

Motor vehicle insurance falls under general property insurance, and claim settlement amounts are strictly governed by the "principle of indemnity". The financial compensation received by the policyholder cannot exceed the actual loss incurred, strictly preventing policyholders from profiting from an insurance claim.

Exercise of the Right of Subrogation: 

If the motor vehicle damage is caused by the unlawful or tortious act of a liable third party, the insurer may first pay out the claim to the policyholder in accordance with the policy terms, thereby legally assuming the policyholder's right of recovery against the at-fault third party up to the indemnified amount.