What does the term "adjustment" refer to in the context of insurance claims?

In the context of insurance claims, "adjustment" refers primarily to the negotiation of claim terms and settlements. This process involves evaluating the claim made by the policyholder and assessing the circumstances surrounding it to determine the appropriate compensation amount. An adjuster, often a representative from the insurance company, works with the policyholder and any other involved parties to analyze the details of the claim, including damages, policy limits, and any applicable coverage conditions. The outcome of this adjustment process ultimately results in a settlement agreement, which is the final decision regarding how much the insurer will pay to resolve the claim.

This understanding is crucial in the insurance industry, as the adjustment phase directly affects both the policyholder's satisfaction and the insurer's financial obligations. It ensures that claims are handled fairly and in accordance with the terms of the policy, providing a clear pathway for resolving disputes arising from insurance claims.