Which term refers to the obligation to pay for claims after a covered loss?

The concept that refers to the obligation to pay for claims after a covered loss is known as indemnity. This principle is fundamental to insurance, as it defines the insurer's responsibility to compensate the insured for losses covered by the insurance policy, effectively restoring the insured to the financial position they were in prior to the loss.

Indemnity ensures that the insured does not profit from an insurance claim but rather receives compensation that reflects the actual loss incurred. This helps maintain fairness in the insurance system, as it provides a safety net for policyholders while also preventing any potential for insurance fraud or moral hazard.

While other terms like subrogation, waiver, and risk assessment are also relevant in the insurance context, they represent different concepts. Subrogation involves the insurer's right to pursue a third party responsible for the loss after compensating the insured. Waiver refers to the voluntary relinquishment of a known right, and risk assessment is the process of evaluating the likelihood and potential impact of risks. Therefore, indemnity is the most accurate term describing the obligation to pay for claims following a covered loss.