Which term is a demand for payment or obligation to pay as the result of a loss?

Which term is a demand for payment or obligation to pay as the result of a loss?

• A. Loss
• B. Claim
• C. Incident
• D. Exposure

Answer: (B)

The idea here is to identify the term that represents a formal demand for payment after a loss. A claim is exactly that: a request to be compensated for the loss, the obligation to pay that arises when damage or liability occurs. The loss is the money value of the damage itself, not the request for payment. An incident is the actual event that causes damage, such as a crash or fire. Exposure is the amount at risk, the potential for loss before any event happens. In practice, after an incident causes damage, the insured files a claim to receive payment for the loss.

The idea here is to identify the term that represents a formal demand for payment after a loss. A claim is exactly that: a request to be compensated for the loss, the obligation to pay that arises when damage or liability occurs. The loss is the money value of the damage itself, not the request for payment. An incident is the actual event that causes damage, such as a crash or fire. Exposure is the amount at risk, the potential for loss before any event happens. In practice, after an incident causes damage, the insured files a claim to receive payment for the loss.