PSI Ohio Insurance Practice Exam

According to the time of payment of claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT for which type of claim?

1. A claim involving accidental death benefits.

2. A claim involving periodic payments.

3. A claim for property damage.

4. A claim made due to natural disasters.

The correct answer is: A claim involving periodic payments.

The time of payment of claims provision in insurance policies stipulates that insurers are required to settle claims promptly after they receive adequate proof of loss. However, certain types of claims may not necessitate an immediate payment because they involve ongoing obligations from the insurer. Periodic payment claims require the insurer to make payments in installments over a designated period rather than as a lump sum. This means that the insurer's obligation extends beyond a single settlement event; rather, it encompasses continuous payments as defined in the policy. Because these claims might involve multiple payment dates over time, the insurer is typically allowed a different timeframe for payment relative to a one-time claim. In contrast, claims involving accidental death benefits, property damage, or claims made due to natural disasters usually result in a singular payment response after the submission of proof of loss, requiring prompt action to meet the claimant's immediate financial needs. This distinction clarifies why periodic payments do not adhere to the same immediate payment stipulation as other claim types.