Property claims glossary
What is a coverage determination?
A coverage determination is the decision on whether, and to what extent, a policy responds to a loss, based on the policy wording and the facts of the loss. Every payment rests on it, so it needs to be consistent from claim to claim and documented well enough to explain to the family and to a regulator.
Worked example · fictitious claim
A $28,000 claim includes $20,000 of covered wind damage, $5,000 of excluded wear and tear on old flashing, and $3,000 of mold that falls within a $5,000 mold sub-limit. The coverage determination allows $20,000 + $3,000 = $23,000. With a $1,000 deductible, the payment before depreciation is $23,000 − $1,000 = $22,000.
How it affects a settlement
The coverage determination decides which part of the loss is payable at all, before any depreciation or deductible is applied. A determination that changes later, after new facts or a second reading of the policy, changes the payment and usually the cycle time with it.
In practice
The structured judgment of whether, and to what extent, a policy responds to a loss: verifying the loss event, the policy in force, the property and peril, exclusions, conditions, limits, and the resulting settlement basis. Done well it is sequential and consistent; done under pressure it becomes intuition: usually right, expensively wrong.
Related
Exclusion · Endorsement chain · Policy coverage checking · property claims glossary