In insurance, what does incurred mean?

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Multiple Choice

In insurance, what does incurred mean?

Incurred means a loss event has occurred and the insurer recognizes a liability for it, even if payment hasn’t happened yet. When a claim has happened and been filed but not yet paid, the insurer has an actual obligation and sets aside reserves to cover the eventual payout. That’s why this description fits incurred—the liability exists because the loss occurred and the claim is in process, regardless of whether payment has been made. If a claim has been paid, it reflects the settlement being completed, not the ongoing recognition of a liability. If a claim is denied or still under investigation, those statuses describe processing steps, but incurred specifically refers to the recognized obligation from a loss event, not the current handling status.

Incurred means a loss event has occurred and the insurer recognizes a liability for it, even if payment hasn’t happened yet. When a claim has happened and been filed but not yet paid, the insurer has an actual obligation and sets aside reserves to cover the eventual payout. That’s why this description fits incurred—the liability exists because the loss occurred and the claim is in process, regardless of whether payment has been made.

If a claim has been paid, it reflects the settlement being completed, not the ongoing recognition of a liability. If a claim is denied or still under investigation, those statuses describe processing steps, but incurred specifically refers to the recognized obligation from a loss event, not the current handling status.

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