Adjustment clause
Encyclopedia
In insurance
, an adjustment clause in a contract specifies how the amount of a claim (particularly a claim against an insurance company) will be determined for the purposes of a settlement, giving consideration to objections made by the debtor or insurance company, as well as the allegations of the claimant in support of his claim.
For example:
Adjustment of claims is not confined to claims against insurance companies. An allowance made by a creditor, particularly a storekeeper
, in response to a complaint by the debtor respecting the accuracy of the account or other claim, or a reduction in the claim or account made to induce a prompt payment, is in a proper sense an adjustment.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, an adjustment clause in a contract specifies how the amount of a claim (particularly a claim against an insurance company) will be determined for the purposes of a settlement, giving consideration to objections made by the debtor or insurance company, as well as the allegations of the claimant in support of his claim.
For example:
- In fire insurance, an adjustment clause provides that in the event of loss or damage at any location mentioned in the policy, the amount of insurance in force at that location shall be prorated to the burned and unburned portions of the property. Also known as a burned and unburned clause.
- In life insuranceLife insuranceLife insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
, an age adjustment clause specifies that if the age of the insured has been understated, the amount payable upon his death shall be that amount which the premium charged would have purchased for the insured's correct age.
Adjustment of claims is not confined to claims against insurance companies. An allowance made by a creditor, particularly a storekeeper
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
, in response to a complaint by the debtor respecting the accuracy of the account or other claim, or a reduction in the claim or account made to induce a prompt payment, is in a proper sense an adjustment.