In insurance terminology, what is a claim?

A claim in insurance terminology refers to a formal request made by a policyholder to an insurance company for payment of benefits under the terms of their insurance policy. When an event occurs that is covered by the policy, such as an accident or loss, the policyholder submits a claim to receive the financial compensation they are entitled to, which helps offset the financial impact of that event.

The other options do not describe a claim accurately. A request for policy cancellation pertains to the termination of an insurance contract and does not involve seeking compensation or benefits. A sum insured refers to the maximum amount an insurer agrees to pay under a policy but does not imply a request for payment. Lastly, an insurance premium is the amount the policyholder pays to maintain coverage, not a claim for benefits. Understanding the definition of a claim is crucial in recognizing the process of claiming benefits and the rights and responsibilities involved in insurance contracts.