Interim Payments Keep A Long Claim Moving

A large claim can take months to quantify, and the losses do not wait. Interim payments release part of the settlement while the total remains under negotiation.

What an interim payment is

It is a payment on account against a claim the insurer accepts in principle, deducted from the final settlement once the full amount is agreed.

It is not a partial settlement or a compromise. Accepting one does not close the claim or limit what can be claimed afterwards, provided the documentation says so.

The distinction is worth confirming in writing, because a payment described as full and final has a very different effect.

When insurers make them

Interim payments are common where liability or cover is not in dispute but quantification is slow. A major household fire or a long injury claim are the typical cases.

They also arise where delay would cause further loss, such as funding immediate repairs to prevent deterioration or covering accommodation while a property is uninhabitable.

Where cover itself is in question, an insurer will usually decline to pay anything on account, since doing so risks undermining a reservation of rights.

Why the insurer benefits too

Funding mitigation early is often cheaper than paying for the damage that would otherwise develop. A drying operation costs less than replacing a floor.

Interim payments also reduce complaints, and a claimant under financial pressure is more likely to accept an inadequate offer, which insurers are expected to avoid.

In injury claims, funding treatment can shorten the period of incapacity and reduce the eventual award, so the incentives align.

How to ask for one

The request works best when it identifies a specific, evidenced element of the claim rather than a general need for money.

Quotations, invoices, receipts and a schedule of costs already incurred allow the insurer to release a defensible amount rather than an arbitrary one.

Where a loss adjuster is appointed, they usually have authority to recommend interim payments, which makes them the right point of contact.

The record of what has been paid

Every interim payment is offset against the final figure, so a running account matters. Disputes at the end of a long claim often turn on what was paid for what.

Payments made for specific heads of loss should be recorded as such, particularly where different limits or excesses apply to different sections.

Practice on interim payments, mitigation funding and the effect of accepting a payment varies by insurer and jurisdiction. The wording and any settlement documentation govern the position.