Published: | Updated: March 29, 2017

Definition - What does Lien mean?

A lien, in the context of insurance, is a legal claim that an auto insurance company, health care provider, or health insurance company has over settlement claims after paying the injured party’s bills.

In general, a lien is the security interest that a creditor has against a certain property. It is attached to the title of the property, say a house or a car, and remains so until the lien is paid.

Insuranceopedia explains Lien

Generally, a lien is a legal claim or a financial interest over a property that belongs to a third party. The person who has a claim against another’s property is called a lienholder. A lienholder may be a creditor who granted a loan for the purchase of the property, or a contractor who provided services for its completion. The government may also have a lien over the property of another, such as in a case where the owner of the property fails to pay real estate taxes. In most cases, the lienholder is not in possession of the asset or property.

In insurance, a third party who has paid the bills or claims of an injured party may file a case to ask the court to order the satisfaction of a lien. The court will attach a lien to a personal property of the insured to satisfy his liabilities to the insurance company. A lien is attached until it is paid completely. Once it is paid, waived, or lifted, a lien release happens, and the property becomes free and available for purchase.

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