Insurance policies usually provide when a loss is payable. The standard property insurance policy normally indicates that the loss is payable 60 days after proof of loss is received and ascertainment of the loss is made. Thus, the shortest time within which payment will be made is 60 days, but an insurer may take a longer period to pay if the parties do not agree on the extent of loss. Despite the policy language, certain states have passed statutes that require payment within a certain number of days.

Because a claim may implicate different areas of coverage, portions of it may be resolved at different times. Once the insurer ascertains that the insured may recover on any part of his claim, it should make payment as to that part at that time regardless of the fact that other parts of the claim are outstanding.

Amount of payment

When an insured submits a claim for a certain amount under his policy, the insurer usually conducts an investigation before paying the requested amount. Such investigation may result in a dispute concerning the amount of the loss incurred. In such a case, the insurer should pay the insured the amount that is undisputed while they continue to settle the disputed portion. It should also explain its partial payment to the insured and inform him of any further investigation that it is conducting concerning the disputed portion.

Interest on payment

Insurance policies do not always indicate whether the insured is entitled to interest on a loss payment. Interest could, for example, run from the date of loss, from the date when the proof of loss is filed, from the date liability is denied, or from the date a lawsuit is filed against the insurer. Thus, courts sometimes look to state statutes that deal with liability for interest payments on general breach of contract claims. Other statutes deal directly with an insurer's refusal to pay a claim. In most jurisdictions, interest begins to accrue when payment is due under the terms of the policy, rather than on the date of loss. Some statutes limit the recovery of interest, as well as attorney fees, to situations in which the insurer acted frivolously, vexatiously, or in bad faith. Once an insurer tenders payment on a disputed claim, the accrual of interest charges is usually suspended.

Method of payment

Most insurers use "payable through" drafts in making payments on insureds' claims. The draft is payable to the appropriate payees, "payable through" a certain bank. "Payable through" drafts are used to protect the insurer from fraud.

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