What is an Advance Payment in the context of insurance claims?

An advance payment in the context of insurance claims refers to a partial payment that is provided to the insured as a preliminary disbursement toward the total amount they may be entitled to for their loss or damages. This type of payment is made prior to the completion of the full claims investigation and settlement process. It helps to provide immediate financial relief to the policyholder while the claim is being thoroughly assessed and processed.

This kind of advance can be crucial in situations where the insured needs urgent funds to cover expenses related to their loss, such as temporary housing or repairs. It reflects the insurer's commitment to supporting their policyholders during difficult times, even before a final determination of liability or total settlement amount is made. The advance payment is often deducted from the final settlement figure once the investigation concludes and the full extent of the loss is determined.