What does the term "conditional payment" mean in insurance claims?

The term "conditional payment" in the context of insurance claims refers to a payment that is made prior to the final determination of coverage and liability. This type of payment is typically issued to cover immediate expenses or losses incurred by the policyholder, even while the insurance company continues to investigate the claim to establish responsibility and full coverage eligibility.

Such payments are often associated with situations where there is an urgent need for funds, such as medical expenses in personal injury cases or property damage that requires immediate repair. By providing a conditional payment, the insurer can assist the insured while still reserving the right to later deny the claim or adjust the payment based on the findings of the final investigation. This process helps in maintaining a good relationship with the policyholder and supports them during a potentially stressful time while the claim is being processed.