What Does Nuisance Mean?
A nuisance, in the context of insurance, is a claim that an insurance company deems unworthy of serious consideration but decides to pay anyway so they can stop doing business with the claimant .
The amount paid is usually lower than the amount claimed.
Insuranceopedia Explains Nuisance
An insurance company will deem a claim a nuisance if they think the claimant:
- Is responsible for the accident for which they are filing a claim
- Is at fault and, therefore, not the insurer's responsibility
- Has not been injured by the accident
- Has indeed been injured but not by the accident for which they are filing a claim
After a preliminary claim rejection and negotiation, the company will decide to settle the claim by offering the claimant money that is usually lower than the original claim. This is simply to avoid being bothered any further by the claimant, which can prove a greater drain on their resources than the settlement itself.