What defines an "excessive claim" in liability insurance?

An "excessive claim" in liability insurance refers to a claim that exceeds the predetermined limits set forth in the insurance policy. Insurance policies outline specific coverage limits, which indicate the maximum amount the insurer will pay for a loss or a liability claim. When a claim surpasses these limits, it falls into the category of excessive claims.

This concept is crucial because it highlights the importance of understanding policy limits for both the insurer and the insured. For insured parties, knowing the limits can help them make informed decisions about the sufficiency of their coverage. For insurers, it emphasizes the need to manage claims effectively within those limits to mitigate financial risk.

The other options pertain to different aspects of claims but do not define the term "excessive claim." Immediate payments relate to the efficiency of the claims process, fraud concerns the integrity of the claim, and documentation typically deals with the substantiation of a claim rather than its excessiveness in relation to limits.