What is the process of reaching an agreement and settling a claim in liability insurance called?

In the context of liability insurance, the process of reaching an agreement and settling a claim is referred to as a settlement. A settlement typically involves the insurer and the claimant agreeing on a compensation amount that resolves the dispute without proceeding to further legal action or a trial. This process is crucial because it allows both parties to avoid the uncertainties and expenses associated with litigation.

Settlements may occur after negotiations, where the terms of the agreement, including monetary compensation or other forms of remedies, are discussed and finalized. Once both parties agree on the terms, the settlement is formally documented, making it legally binding. This is an essential part of the insurance claims process, aimed at providing a resolution for the injured party while minimizing the insurer’s potential liabilities.

While negotiation, resolution, and reconciliation all relate to the process of settling disputes, "settlement" specifically denotes the conclusion of that process with a formal agreement. Therefore, it is the most accurate term for describing the culmination of the claims process in liability insurance.